Question

The ability of firms to enter and exit a market over time means that, in the long run, Select one: a. the supply curve is more elastic. b. the demand curve is less elastic. c. the demand curve of more elastic. d. the supply curve is less elastic.

Answer 1

Answer:

a. the supply curve is more elastic

Explanation:

In the long run, firms can enter and exit a market more easily. This makes supply more elastic.

For example, in the short run, the price of a good night have fallen which causes profit to fall. But the cost of exiting the market might be too high in the short run, so the producer continues supplying. In the short run, supply is more inelastic. But over time, the firm can exit the unprofitable market, this would lead to fall in supply and supply is therefore more elastic.

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