Consider the following scenario. Margaret is a carrot farmer and supplies carrots at the local market. Assume
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Question:
Consider the following scenario. Margaret is a carrot farmer and supplies carrots at the local market. Assume the market for carrots is perfectly competitive. Due to a change in consumer preferences the demand for carrots falls. Margaret's Average Total Costs (ATC) are now greater than market price. Should Margaret exit the market? What effect does the decrease in demand for carrots have on abnormal profits in the long-run? Explain
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