2. Competitive Market Analysis: Illinois is known for its production of soybeans. Soybean

production in Illinois set a record in 2017 for the most beans per acre. Each year since,

including 2020, Illinois has outproduced all other states. (Illinois is expected to produce 62

bushels per acre in 2020, far outproducing most states with only Indiana and Nebraska

approaching the yield of Illinois.)

a. In early November 2020, the price of beans per bushel was $10.51. Suppose a farmer

wishes to raise its price to $12.00 per bushel to make more profit. What prevents that?

Briefly explain.

b. Why would you not expect any single farmer to advertise to sell more soybeans?

Briefly explain.

c. In June 2020, a headline read "Soybeans, wheat and corn fall on positive U.S. crop

picture." Why would prices fall if the US crop production looks good? What does that

do to the farmer's profit?

d. By the Fall of 2020, the story had changed dramatically. Demand increased from China

and due to the return of meatpacking. Supply was affected by the La Nina weather

system causing reduced production. This all led to much higher prices. (In November

2019, the price was around $9.30 per bushel.) Is it possible that farmers could make

economic profits this year? If these conditions hold for the rest of the year, do you

expect prices to increase (or at least not decrease) or decrease? Why?