Suppose farmers in a given market can either grow soy beans or corn on their land. In addition, suppose an increase in the demand for corn causes the price of corn to increase. As a result of the increase in the price of corn, farmers who were already growing corn will earn an:
A. economic profit in the short run.
B. economic loss in the short run.
C. economic profit in the long run.
D. economic loss in the long run.
Answer: A
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To the extent that special-interest groups engage in rent seeking, they
a. are guilty of tax evasion b. tend to make the economy more efficient c. support legislation transferring wealth to themselves only if the measure increases the economy's overall efficiency d. shift resources from endeavors that create income to activities that simply transfer income e. tend to increase the economy's total output of goods and services while redistributing income
In a free market for rental housing, the average rental rate
A. includes a large amount of economic rent. B. includes zero economic rent. C. is entirely economic rent, since rental housing is fixed in supply. D. includes some economic rent.
Which of the following is the closest example of a perfectly competitive industry?
A. convenience stores B. alfalfa C. cigarettes D. casual dining restaurants
Refer to the diagrams, in which AD 1 and AS 1 are the "before" curves and AD 2 and AS 2 are the "after" curves. Other things equal, inflation is absent in:
A. panel (A) only.
B. panel (B) only.
C. panel (C) only.
D. panels (A) and (C).