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.

Question

Quizplus · Accepted Answer

In a purely competitive market, if firms are suffering economic losses, some will exit the market. This reduction in supply will cause the market price to rise until firms are no longer making losses.

Assume That the Market for Corn Is Purely Competitive