Suppose farmers in a given market can either grow soy beans or corn on their land. In addition, suppose an increase in the demand for corn causes the price of corn to increase. As a result of the increase in the price of corn, farmers who were already growing corn will earn an:
A)economic loss in the short run.
B)economic profit in the long run.
C)economic profit in the short run.
D)economic loss in the long run.

Question

Quizplus · Accepted Answer

For farmers who were already growing corn, and increase in the price of corn will lead to higher profits in the short run. In the long run, entry into the market will drive economic profits to zero.

Suppose Farmers in a Given Market Can Either Grow Soy