Assume that the market for corn is purely competitive. Currently, firms growing corn are suffering economic losses. In the long run, we can expect:
A. New firms to enter causing the market price of corn to fall
B. New firms to enter causing the market price of corn to rise
C. Some firms to exit causing the market price of corn to fall
D. Some firms to exit causing the market price of corn to rise
D. Some firms to exit causing the market price of corn to rise
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Why would it be a mistake to treat opportunity costs and explicit monetary costs as identical?
A. Because sometimes the market does not function well. B. Because opportunity costs are different for different goods. C. Because there are trade-offs involved in any decision. D. Because of existence of efficient markets.
You choose to get a flu shot each fall and your roommate chooses not to get a flu shot. For your roommate, you getting a flu shot is a
A) positive externality. B) negative externality. C) transactions cost. D) property right.
The total amount of consumer surplus and producer surplus is at its maximum when
A) consumers and producers are allowed to trade at the market clearing price. B) the government imposes a price floor that is higher than the market clearing price. C) the government imposes a price ceiling that is lower than the market clearing price. D) free market exchanges do not exist.
What is the difference between defensive and dynamic open market operations?
What will be an ideal response?