1) Assume that the market for soybeans is perfectly competitive. Currently, firm

Question

1) Assume that the market for soybeans is perfectly competitive. Currently, firms growing soybeans are experiencing economic profits. In the long run, we can expect

A) new firms to enter, causing the market price of soybeans to decrease.

B) new firms to enter, causing the market price of soybeans to increase.

c) some firms to exit, causing the market price of soybeans to decrease.

D) some firms to exit, causing the market price of soybeans to increase.

2. Use the following graph showing the average total cost curve for a perfectly competitive firm to answer the next question.

At the long-run equilibrium level of output, this firm's profit

A) is zero.

B) is $400.

C) is $200.

D) cannot be determined from the information provided.

3. If there is a decrease in market demand for a product exchanged in a perfectly competitive industry, it results in an industry contraction that will end when the product price is

A) greater than the marginal cost faced by the firms.

B) equal to the marginal cost faced by the firms.

C) less than the marginal cost faced by the firms.

D) greater than the average cost faced by the firms.

Explanation / Answer

A) new firms to enter, causing the market price of soybeans to decrease.

D) cannot be determined from the information provided.

Because no data about MC, productivity is shown profit cannot be calculated unless you know the sale

C) less than the marginal cost faced by the firms.

When price can be bought down lower than marginal cost of the firms certainly the firm which is incharge of exchange wins it al.

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