In the long run, a firm can leave an industry when it experiences persistent losses because:
Correct answer: C. All inputs can be adjusted
- A. All inputs become fixed
- B. All costs become sunk
- C. All inputs can be adjusted
- D. Market demand becomes vertical
Explanation
The long run is a period in which the firm can adjust all inputs and exit the industry. Persistent losses provide an incentive to leave, unlike the short run when some commitments may be fixed. The other options do not define long-run adjustment.
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Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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