In a competitive market where the elasticity of the market demand curv
In a competitive market where the elasticity of the market demand curve is -2, the elasticity of the supply curve is 1, and an individual firm faces a residual demand curve with an elasticity of -98. What happens to the individual firm’s residual demand curve when the number of firms serving this market declines?
A) It becomes less elastic.
B) It becomes more elastic.
C) It does not change.
D) It cannot be determined.
ANSWER
A
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