An industry in which economics profits are negative and which will, therefore, decrease its output as firms leave it ?
Correct answer: D. Declining industry
- A. Increasing cost industry
- B. Decreasing cost industry
- C. None of these
- D. Declining industry
Explanation
A declining industry faces persistent negative economic profits, causing firms to leave and total industry output to fall. Increasing-cost and decreasing-cost describe how industry costs respond to expansion, not this withdrawal process.
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