Suppose a product suddenly loses popularity and the firms producing the product begin to realize large losses. As firms exit the market, the equilibrium price in the market will:
A. increase and make the remaining firms stay in business.
B. decrease and make the remaining firms stay in business.
C. decrease further and push more firms out of business.
D. decrease further while making the remaining firms realize profits again.
Answer:A
Suppose a product suddenly loses popularity and the firms producing the product begin to realize large losses. As firms exit the market, the equilibrium price in the market will:
A. increase and make the remaining firms stay in business. B. decrease and make the remaining firms stay in business. C. decrease further and push more firms out of business. D. decrease further while making the remaining firms realize profits again.