Assume That the Market for Soybeans Is Purely Competitive

question 125

Multiple Choice

Assume that the market for soybeans is purely competitive.Currently, firms growing soybeans are earning positive economic profits.In the long run, we can expect

• A)new firms to enter, causing the market price of soybeans to fall.
• B)new firms to enter, causing the market price of soybeans to rise.
• C)some firms to exit, causing the market price of soybeans to fall.
• D)some firms to exit, causing the market price of soybeans to rise.

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Definitions:

Long-Run Equilibrium

A state in which all firms in a market are earning normal profits, and there is no incentive for firms to enter or exit the market.

Marginal Cost

Marginal cost is the additional cost incurred by producing one additional unit of a good or service.

Celebrity Spokesperson

A famous individual who is paid to use their fame to help promote a product or service.

Monopolistic Competitors

Companies that have many competitors but try to differentiate their products from others to gain a competitive edge.