00:01
So here i've drawn a market for corn with a short run supply curve, right? and we're told that the price of corn went crazy last year as demand for corn increased dramatically.
00:11
So there's this massive, sorry, massive increase in the demand for corn, which drove up the price.
00:17
But now we're told that the market for corn is perfectly competitive, right? and perfect competition has some very specific rules, right? it says that in long run, an infinite number of firms can enter and produce at the minimum of the long run average cost care.
00:45
There's nothing special.
00:47
Perfect competition says that there's nothing special about growing corn, that any firm can start up growing corn and produce at some level associated with the minimum of the long run average cost.
01:00
Curve that characterizes this industry, right? so in the long run, in the long run, supply is horizontal, right? if the price of corn goes up, corn farmers are going to make profits, other people are going to see the corn farmers making profits, and people will join the industry...