Assume soybeans are produced in a perfectly competitive market. 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 ________.
A. fewer; the same
B. the same number of; the same
C. fewer; lower
D. more; the same
Answer: C
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The circular flow model with government included would show that government
A. produces goods and services and sells them in the product market to generate net taxes. B. obtains revenues in the product market and uses it to cover costs in the resource market. C. controls economic resources and sells them in the resource market. D. provides goods and services to businesses and households and pays for them with net taxes.
Is it possible for accounting profit to be positive but economic profit to be negative? Explain with an example
What will be an ideal response?
Refer to Figure 9-1. Suppose the government allows imports of leather footwear into the United States. The market price falls to $18. What is the value of domestic producer surplus?
A) $0 B) $40 C) $320 D) $360
Recent developments in political economy
a. render much of the traditional field of political science obsolete. b. render much of the traditional field of economics obsolete. c. illustrate the resolute nature of democracy. d. point to the fact that government is a less-than-perfect institution.