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Under what conditions will a firm exit a market? Explain. Find an article that addresses the...

Under what conditions will a firm exit a market? Explain. Find an article that addresses the announcement that a firm is leaving a market. Explain the conditions for the departure within the context of the article. Be sure to use APA format to cite sources.

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Answer #1

Firm tend to exit the market in face of rising cost and fall in the revenue or when price tends to be less than average cost of production, firm exits the market. This is only one reason, there might be host of reasons.

  • Fall in profit expectations.
  • Imposition of government tariffs and entering into new free trade agreements.

Many firms are leaving UK market due to possible rise in tariffs while exporting to EU countries. Honda has decided to exit the UK market and shift its facility to home so that it can avoid paying tariffs while exporting to the EU countries. By shifting its production facility, honda is likely to increase in revenue and profits.

Sources:

https://www.independent.co.uk/news/business/news/honda-close-swindon-plant-job-losses-brexit-diesel-emissions-a8784846.html

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