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.

Question

Quizplus · Accepted Answer

In a purely competitive market, negative economic profits signal that some firms are not covering their total costs, leading to an exit of firms from the market. This reduction in the number of firms decreases the overall market supply.

Suppose That the Corn Market Is Purely Competitive