The apple market is perfectly competitive and is in long- run equilibrium. Now a disease kills 50 per cent of the apple orchards. In the short run, the price of a bag of apples _______ and the remaining apple growers make _______ economic profit. In the long run, the _______.

Question

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In the short run, the supply of apples decreases due to the disease, leading to an increase in the price of apples and allowing the remaining apple growers to make positive economic profits. In the long run, the high profits attract new entrants or encourage the replanting of orchards, increasing the supply until the price returns to the level where economic profits are zero, restoring the long-run equilibrium.

The Apple Market Is Perfectly Competitive and Is in Long-