Suppose that the corn industry is perfectly competitive with constant returns to scale. The price per bushel is $2. If the long-run minimum ATC is $1.50 per bushel, it should follow that (ceteris paribus) the

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In a perfectly competitive market with constant returns to scale, firms enter the market if they can make a profit, which they can when the price is above the minimum average total cost (ATC). This entry continues until the price falls to the minimum ATC, which is $1.50 in this case, eliminating economic profits and ensuring the price in the long run equals the minimum ATC.

Suppose That the Corn Industry Is Perfectly Competitive with Constant