In the presence of , firms exit until the market reaches the point at which the firms are generating a profit; then exit stops and the market settles down into its -run equilibrium. (Enter one word in each blank.)
Question
In the presence of , firms exit until the market reaches the point at which the firms are generating a profit; then exit stops and the market settles down into its -run equilibrium. (Enter one word in each blank.)
Solution
In the presence of "losses", firms exit until the market reaches the point at which the firms are generating a "zero" profit; then exit stops and the market settles down into its "long"-run equilibrium.
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