Suppose Ethanol Is Produced in a Perfectly Competitive Market

Multiple Choice

Suppose ethanol is produced in a perfectly competitive market.If a subsidy is paid to ethanol producers,the ethanol producers' profit will ________.

A) increase in the short run but reduce to zero in the long run
B) increase in the short run and in the long run
C) increase in the short run but become negative in the long run
D) decrease in the short run but reduce to zero in the long run