Decide whether a firm operates or shuts down in the short run, then explain how profit opportunities and losses drive long-run entry or exit.
Soja Farm is a typical profit-maximizing firm that produces and sells soybeans in a constant-cost, perfectly competitive market that is in long-run equilibrium. The market equilibrium price of soybeans is $ 14 per bushel.
Given the increase in popularity of tofu in part (c), what will happen to the number of firms in the soybean market in the long run? Explain.
State that the number of firms will increase in the long run and explain that the positive economic profits earned by soybean producers will encourage new firms to enter the
market.
1 point