When firms have an incentive to exit a competitive market their exit will ........

Economics- Phase (I & II) Demand and Supply , Market Structures

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When firms have an incentive to exit a competitive market, their exit will

Drive down market prices

Drive down profits of existing firms in the market.

Decrease the quantity of goods supplied in the market.

All of the above are correct.

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Explanation:

A perfectly competitive firm is a price taker, which means that it must accept the equilibrium price at which it sells goods.This is because when firms exit the industry, the supply produced would reduce and hence the quantity supplied to the market would fall.

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