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12 March, 17:12

The exit of existing firms from a competitive market will a. decrease market supply and increase market price. b. decrease market supply and decrease market price. c. increase market supply and decrease market price. d. increase market supply and increase market price.

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  1. 12 March, 18:59
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    The correct answer is option A.

    Explanation:

    The exit of existing firms from the market will reduce the overall market supply. This will cause the market supply curve to move to the left.

    This leftward shift in the market supply curve will lead to an increase in the equilibrium price. The equilibrium quantity will be reduced.

    The other firms in the market will get more market share and higher profits.
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