If farmers operating in the competitive wheat industry are incurring l

If farmers operating in the competitive wheat industry are incurring losses, and are not kept in business with government subsidies, which of the following will result?

A) Price and quantity produced will both increase in the long run.
B) Resources will be reallocated out of the wheat industry into more productive uses.
C) Farmers will run economic losses indefinitely, if they are rational.
D) The supply of wheat will fall to near zero and the U.S. will become dependent on foreign suppliers of food.

ANSWER

B