-The Figure Above Shows a Typical Perfectly Competitive Corn Farm

question 63

Multiple Choice

-The figure above shows a typical perfectly competitive corn farm, whose marginal cost curve is MC and average total cost curve is ATC. The market is initially in a long-run equilibrium, where the price is $3.00 per bushel. Then, the market demand for corn decreases and, in the short run, the price falls to $2.50 per bushel. In the new short-run equilibrium, the farm

• A) incurs an economic loss of between $1 and $40,000.
• B) makes zero economic profit.
• C) incurs an economic loss of between $40,001 and $130,000.
• D) incurs an economic loss of more than $130,001.

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