A firm will exit a competitive market when Acosts force the

A firm will exit a competitive market when

A.costs force the marginal cost curve to shift to the left.

B.the longminus?run profit would be negative.

C.it can earn only earn a zerolong?run profit.

D.Both B and C.

Solution

Ans is B

In long run firm will exit the market when firm earns negative profit in long run.

When there are economic profit firms will enter and when firm earn economic loss, then some existing firm will exit the market due to which Industry aggregate supply shift to the left and thus price rises leading to normal profit or zero economic profit.