In the summer of 1993, there were devastating floods in the midwestern portion of the United States where corn is produced. What effect do you think these floods had on the price of corn and beef? What do you think happened to Canadian corn farmers?
Corn prices rose because of a decrease in supply; the number of suppliers was cut drastically. Beef prices
rose because the cost of a resource (feed) rose, causing the supply of beef to decrease. Canadian farmers
should have experienced an increase in income because an increase in demand from U.S. consumers would
have caused the price of Canadian corn to increase.
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The division of the burden of a tax between buyers and sellers in a market is called tax allocation
Indicate whether the statement is true or false
Zero economic profits for a perfectly competitive firm in the long run means
a. the firm must exit the industry. b. the firm is in equilibrium. c. the firm will shut down until the market improves. d. average revenue is insufficient to cover long-run average cost.