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

Question

Quizplus · Accepted Answer

In a perfectly competitive industry, if the market price of soybeans falls, the farmer will lower their production to reach the point where the marginal cost equals the new market price, thus they will be producing fewer bushels of soybeans. Since the market price has decreased, the total revenue will also decrease, but the total cost may not decrease as much, causing the profit to fall. Therefore, the farmer's profit will be lower.

Assume Soybeans Are Produced in a Perfectly Competitive Industry