When the macroeconomy is doing poorly (as it was in 2009), profits of

When the macroeconomy is doing poorly (as it was in 2009), profits of existing firms decrease, creating an incentive for existing firms to exit unprofitable markets.

This in turn makes it more difficult for the remaining firms to mark up price over average or marginal cost. Indicate whether the statement is true or false

 

ANSWER

TRUE

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