Assume soybeans are produced in a perfectly competitive industry.A soybean farmer is currently maximizing his profits.If the market price of soybeans falls,after the farmer adjusts to the new price,he will be producing ________ bushels of soybeans and his profit will be ________.

Question

Quizplus · Accepted Answer

In a perfectly competitive market, a decrease in market price will result in a decrease in a farmer's profit-maximizing level of output. This is because the marginal cost of production will now exceed the market price, leading the farmer to reduce production. As a result, the farmer will be producing fewer bushels of soybeans and his profit will decrease. Therefore, option B is correct.

Assume Soybeans Are Produced in a Perfectly Competitive Industry