1st attempt See Hint Assume there are currently five firms p

1st attempt See Hint Assume there are currently five firms producing and selling computer chips in the Latin American market. Also assume that the product is differentiated and barriers to entry are high in the industry, making this market an oligopoly. If two firms were to exit the market, economists expect the equilibrium price will likely will likely and the equilibrium quantity not change decrease increase 9 OF 18 QUESTIONS COMPLETED SUBMIT ANSWER Type here to search Smartworld and 3

Solution

The equilibrium price will INCREASE and the equilibrium quantity will likely to DECREASE Explanation: As there is restrcition to entry, when the two firms in oligopoly exit, the supply of the indutry goes dowwn. This will result in supply curve to fall and shift to left. With the demand remaining same, this will result in price to increases as supply decreases and equilibrium quantity will also fall with decrease in supply.