Question

If a typical firm in a perfectly competitive industry is incurring​ losses, then A. all firms will continue to lose money. B. some firms will enter in the long run causing market supply to increase and market price to​ rise, increasing profit for all firms. C. some firms will exit in the long run causing market supply to decrease and market price to​ fall, increasing losses for the remaining firms. D. some firms will exit in the long run causing market supply to decrease and market price to​ rise, increasing profits for the remaining firms.

Answer 1

D. some firms will exit in the long run causing market supply to decrease and market price to​ rise, increasing profits for the remaining firms.

Answer 2

Option B is correct.

some firms will enter in the long run causing market supply to increase and market price to​ rise, increasing profit for all firms.

Step-by-step explanation:

When firms in perfectly competitive Market incurs a loss then some firms will exit the market, leaving less number of firms and thus supply decreases which also increase the prices and increases the profit of the remaining firms