Suppose the Market for Corn Is a Purely Competitive, Constant-Cost

question 152

Multiple Choice

Suppose the market for corn is a purely competitive, constant-cost industry that is in long-run equilibrium. Now assume that an increase in consumer demand occurs. After all resulting adjustments have been completed, the new equilibrium price will be

• A) the same as the initial equilibrium price, but the new industry output will be greater than the original output.
• B) greater than the initial price, and the new industry output will be greater than the original output.
• C) less than the initial price, but the new industry output will be greater than the original output.
• D) the same as the initial equilibrium price, and the industry output will remain unchanged.

Understand the conditions for and implications of Pareto efficiency in resource allocation.

Grasp the concept of welfare economics, including the utility possibilities frontier and how it reflects the efficient allocation of resources.

Analyze scenarios involving trade among individuals to identify mutually beneficial exchanges.

Understand the first theorem of welfare economics and its implications for resource allocation in competitive markets.

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Definitions:

Marijuana

A psychoactive drug from the Cannabis plant, used for medical or recreational purposes.

Opiates

Drugs derived from opium, typically used for their analgesic (pain-relieving) properties; can lead to dependence and addiction.

Marijuana

A mind-altering substance derived from the Cannabis plant, utilized for either medicinal or recreational uses.

Endorphins

Endorphins are natural chemicals produced by the body to relieve stress and pain, often referred to as the body's own opioids because of their analgesic properties.