If some sellers exit a competitive market, how will this affect its equilibrium?
What will be an ideal response?
The market supply curve in a competitive market is a horizontal summation of individual supply curves. As a result, when some sellers exit the market, the market supply curve will shift to the left. With demand remaining unchanged, this will increase the equilibrium price and reduce the equilibrium quantity sold.
You might also like to view...
Which of the following is an example of the way the financial markets in the United States can encourage technological progress more efficiently than other countries?
A) The level of legal protection for investors in the United States is relatively low. B) Banks in the United States are more willing to take on risk because the government guarantees each bank cannot lose more than $100,000 on any given loan that defaults. C) Because the financial market in the United States is so large, the quantity of trading in corporate stocks and bonds makes those investments less liquid. D) Even when entrepreneurs cannot secure sufficient funding for projects from banks, venture capital firms may be willing to lend money.
Assume there are three hardware stores, each willing to sell one standard model hammer in a given time period. House Depot can offer their hammer for a minimum of $7. Lace Hardware can offer the hammer for a minimum of $10. Bob's Hardware store can offer the hammer at a minimum price of $13. Given the scenario described, if the market price of hammers increased from $9 to $12, total producer surplus would increase by:
A. $7. B. $5. C. $1. D. $3.