Assume soybeans are produced by a perfectly competitive, constant cost industry. Fresh Fam is a typical frm producing soybeans and is cumently operating with an economic loss. a. Using a correctly labeled graph for Fresh Farm, show each of the following in the short run      i. The marginal cost curve and average total cost, labeled MC and ATC, respectively      ii. Fresh Farm's price and loss-minimizing quantity, labeled P; and Q, respectively.      iii. The average variable cost curve, labeled AVC b. Suppose that newspapers have recently reported that excessive soybean consumption can cause health problems. As a resut, wil the new loss-minimizing quanty for Fresh Fam be grester than less than, ar equa to Op in the short run? Explain. c. Is the long-run market supply for soybeans perfectly inelastic, relatively inelastic, unit elastic, relatively elastic, or perfecty elastic? d. Assume now that the soybean market is in a long-run equilibrium and that fertilizers used in soybean production cause water polution. Using a comectiy labeled gragh for the soybean market, show each of the following.    I Market equilibrium quantity and price, labeled QM and PM    II Marginal social cost curve, labeled MSC    III. Socially optimal quantity, labeled Os IN. The area representing deadweight loss, shaded completely

ENGR.ECONOMIC ANALYSIS
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ISBN:9780190931919
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Chapter1: Making Economics Decisions
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Assume soybeans are produced by a perfectly competitive, constant cost industry. Fresh Fam is a typical frm producing soybeans and is cumently operating with an economic loss.

a. Using a correctly labeled graph for Fresh Farm, show each of the following in the short run

     i. The marginal cost curve and average total cost, labeled MC and ATC, respectively

     ii. Fresh Farm's price and loss-minimizing quantity, labeled P; and Q, respectively.

     iii. The average variable cost curve, labeled AVC

b. Suppose that newspapers have recently reported that excessive soybean consumption can cause health problems. As a resut, wil the new loss-minimizing quanty for Fresh Fam be grester than less than, ar equa to Op in the short run? Explain.

c. Is the long-run market supply for soybeans perfectly inelastic, relatively inelastic, unit elastic, relatively elastic, or perfecty elastic?

d. Assume now that the soybean market is in a long-run equilibrium and that fertilizers used in soybean production cause water polution. Using a comectiy labeled gragh for the soybean market, show each of the following.

   I Market equilibrium quantity and price, labeled QM and PM

   II Marginal social cost curve, labeled MSC

   III. Socially optimal quantity, labeled Os IN. The area representing deadweight loss, shaded completely

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