Suppose that the price of corn, a crop produced in a perfectly (or purely) competitive industry, increased 208% last year as demand for corn‑based ethanol fuel increased. What do you expect to happen in the long run for the corn industry given this recent success? A. The price per bushel of corn will continue to increase, yielding higher profits. Thus, more firms will enter the market indefinitely. B. Profits will become negative due to overfarming, which will result in the corn farming industry going under. C. Profits will be equal to zero. D. None of the above. Suppose the firms in the market for bacon, also a perfectly (or purely) competitive industry, experienced losses last quarter due to people becoming increasingly concerned about how high-fat diets negatively impact health. What do you expect to happen in the long run for the bacon industry? A. Seeing this as an opportunity to monopolize a fledging industry, firms will enter the industry, shifting supply to the right. B. Profits will remain negative, which will result in the closing down of the industry as a whole. C. Profits will be equal to zero. D. None of the above.
Suppose that the price of corn, a crop produced in a perfectly (or purely) competitive industry, increased 208% last year as demand for corn‑based ethanol fuel increased. What do you expect to happen in the long run for the corn industry given this recent success? A. The price per bushel of corn will continue to increase, yielding higher profits. Thus, more firms will enter the market indefinitely. B. Profits will become negative due to overfarming, which will result in the corn farming industry going under. C. Profits will be equal to zero. D. None of the above. Suppose the firms in the market for bacon, also a perfectly (or purely) competitive industry, experienced losses last quarter due to people becoming increasingly concerned about how high-fat diets negatively impact health. What do you expect to happen in the long run for the bacon industry? A. Seeing this as an opportunity to monopolize a fledging industry, firms will enter the industry, shifting supply to the right. B. Profits will remain negative, which will result in the closing down of the industry as a whole. C. Profits will be equal to zero. D. None of the above.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Suppose that the price of corn, a crop produced in a perfectly (or purely) competitive industry, increased 208% last year as demand for corn‑based ethanol fuel increased.
What do you expect to happen in the long run for the corn industry given this recent success?
A. The price per bushel of corn will continue to increase, yielding higher profits. Thus, more firms will enter the market indefinitely.
B. Profits will become negative due to overfarming, which will result in the corn farming industry going under.
C. Profits will be equal to zero.
D. None of the above.
Suppose the firms in the market for bacon, also a perfectly (or purely) competitive industry, experienced losses last quarter due to people becoming increasingly concerned about how high-fat diets negatively impact health.
What do you expect to happen in the long run for the bacon industry?
A. Seeing this as an opportunity to monopolize a fledging industry, firms will enter the industry, shifting supply to the right.
B. Profits will remain negative, which will result in the closing down of the industry as a whole.
C. Profits will be equal to zero.
D. None of the above.
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