Question

Assume declining profits in the market for Internet service force several firms in the area to drop out of the market. All else constant, this would cause the_________.

a. equilibrium price to increase and equilibrium quantity to decrease.
b. equilibrium price and quantity to decrease.
c. equilibrium price and quantity to increase.
d. equilibrium price to decrease and equilibrium quantity to increase.

Answer 1

The answer is a. equilibrium price to increase and equilibrium quantity to decrease.

Step-by-step explanation:

The exit of firms from the market will cause supply curve to shift to the left. This will cause the equilibrium quantity to decrease and the equilibrium price to increase.