alleryStart learning →The source defines 'exit' as which process?
AFirms entering an industry because of industry profits
BOne firm closing briefly just for a holiday
COne firm switching over to a new supplier
DFirms reducing output and shutting down from industry losses
Answer & Solution
Correct answer: D. Firms reducing output and shutting down from industry losses
1. The source's key term for exit ties it directly to industry losses, not profits.
2. Losses push firms to reduce production or shut down entirely over the long run.
3. Firms responding to profits by expanding or joining an industry describes entry, the opposite process.
4. A temporary holiday closure or a supplier switch are not the industry-wide, loss-driven process the source calls exit.
_Source: OpenStax Principles of Microeconomics for AP Courses (CC BY 4.0), Ch 8 "Perfect Competition", section 8.3 | Entry and Exit Decisions in the Long Run_
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