Suppose That the Corn Market Is Purely Competitive

question 83

Multiple Choice

Suppose that the corn market is purely competitive. If the corn farmers are currently earning negative economic profits, then we would expect that in the long run the market

• A)supply will decrease.
• B)supply will increase.
• C)demand will decrease.
• D)demand will increase.

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Definitions:

Kinked-demand Curve

A demand curve that has a distinct bend or kink, typically illustrating that a firm in an oligopoly will experience a different elasticity of demand for price increases compared to price decreases.

Price Cut

A reduction in the price of a good or service to attract more customers or boost sales.

Price Increase

A rise in the cost of goods or services, often measured by inflation rates or observed in market prices.

Demand Curve

A graph that represents the relationship between the price of a good or service and the quantity of it that consumers are willing and able to purchase at various prices.