The corn market is perfectly competitive,with thousands of corn farmers.In the 2000s,the price of corn soared so that new farmers entered the corn market.Initially,entry ________ the economic profit of the initial corn farmers and in the long run the initial corn farmers ________.

Question

Quizplus · Accepted Answer

In a perfectly competitive market, the entry of new farmers increases supply, leading to a decrease in price. Initially, this reduces the economic profit of the initial corn farmers. In the long run, the market reaches an equilibrium where firms make zero economic profit, as any economic profit would attract more firms into the market, driving profits down to zero.

The Corn Market Is Perfectly Competitive,with Thousands of Corn Farmers