Assume that goods X and Y are substitutes and are produced in perfectly competitive markets. If there is a decrease in the supply of good X, which of the following will happen in the market for good Y in the long run?
A) Firms will exit, causing market price to rise.
B) Firms will enter, causing market price to fall.
C) Price will be higher at the new long-run equilibrium as a result of entry into the market.
D) The firms that were already in the industry will continue to earn positive economic profit.
B
Economics
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