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.

Question

Quizplus · Accepted Answer

In a purely competitive market, positive economic profits attract new firms, increasing supply and causing the market price to fall until firms earn normal profits.

Assume That the Market for Soybeans Is Purely Competitive