Question

Three firms are currently producing and selling in a market. When one of the three firms exits the market, economists expect that the equilibrium price will ________ and the equilibrium quantity will ________.

Answer 1

Answer: higher; lower

Explanation:

From the question, we are informed that three firms are currently producing and selling in a market. When one of the three firms exits the market, economists expect that there will be a rise in the equilibrium price while there will be a reduction in the equilibrium quantity.

This is because when one producer leaves, there will be less supply of the good that is sold, this will eventually lead to a rise in price.