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's
A) supply curve will shift to the left.
B) supply curve will shift to the right.
C) demand curve will shift to the left.
D) demand curve will shift to the right.

Question

Quizplus · Accepted Answer

In a purely competitive market, if firms are earning negative economic profits, some firms will exit the market in the long run. This will decrease the market supply, causing the supply curve to shift to the left.

Suppose That the Corn Market Is Purely Competitive