Respuesta :
As new enterprises enter the market, the price of soybeans falls. Price takers exist in a totally competitive market, further explained.
What does a competitive market imply?
A competitive market is one in which no single customer or producer has significant market power. The supply curve, which represents a quantity, changes its reaction to supply and demand.
In a completely competitive market, a firm's profit-maximizing output will be determined at the level where long-run marginal cost (LMC) equals long-run marginal revenue (LMR) or price in the long run.
If existing firms are making above-average profits at this level of output, additional firms will enter the market in the long run. The market supply of soybeans will increase as new firms enter the market, resulting in a right shift in the supply curve. The equilibrium price (market price) will fall as a result.
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