The correct answer is: A. will be the first to leave the industry, if the price falls.
A marginal firm is a firm that is operating at a loss. If the price of the good or service that the firm produces falls, the firm will continue to produce as long as the revenue from selling the good or service is greater than the variable costs of production. However, if the price falls below the variable costs of production, the firm will not be able to cover its costs and will have to shut down.
A firm that is operating at a loss is said to be “marginal” because it is on the margin of profitability. If the price falls, the firm will be the first to leave the industry because it is the firm that is least able to withstand a decline in price.
Option B is incorrect because a firm that is making a profit will not leave the industry, even if the price falls. Option C is incorrect because a firm that is making a profit will not reduce its price, unless it is forced to do so by competition. Option D is incorrect because a marginal firm is not the only type of firm that will leave the industry if the price falls. All firms that are operating at a loss will leave the industry if the price falls.