The above graphs show the market for corn. The firm is operating in a constant-cost industry.

a. What type of market does Grand Farm sell their corn in? Explain

b. Is Grand Farm currently earning economic profit, earning a loss, or are they at long-run equilibrium? Explain.

c. In the long run, what happens to each of the following?

i. The number of firms in the industry? Explain

ii. The equilibrium price in the market; does it increase, decrease, or remain the same?

d. Is Grand Farm currently allocatively efficient? Explain

e. Is Grand Farm currently productively efficient? Explain

f. Assume that corn is an inferior good and consumers' income rises.

i. Would the price in the market increase, decrease, or remain the same? Explain.

ii. Would the price for the firm increase, decrease, or remain the same?

iii. Would the quantity in the firm increase, decrease, or remain the same? Explain.

g. Assume that the price falls for the firm below their ATC. What must be true for them to continue to operate?

h. Rent is an important fixed cost for farms currently growing corn, and the industry experiences a decrease in rent.

i. Would the profit-maximizing quantity for the firm increase, decrease, or remain the same? Explain.