O Macmillan Learning Will, Jill, and Phil are all wheat farmers. The wheat industry is perfectly (purely) competitive. The first chart shows how much each farmer produces at different price levels. The second chart shows each farmer's minimum average total cost (ATC), average variable cost (AVC), and marginal cost (MC). Based on this data (assuming these three are the only producers), answer the questions that follow. Short-run quantity supplied Price Will Jill Phil $2.00 4 2 0 $4.00 6 4 $6.00 9 5 $8.00 12 8 246 Firm a. What is the cause of the divergence in the short-run Minimum ATC Will Jill Phil $2.50 $5.00 $7.00 and long-run supply curves? O changes in the market Minimum AVC Minimum MC $1.00 $2.00 $2.50 $0.50 $1.00 $2.00 government regulation Odiffering individual cost structures b. Suppose that the market price dips to $2.25 in the short run before ultimately settling at $2.50 per bushel. Who exits immediately, and who exits in the long-run when costs are no longer fixed? Jill exits immediately, Phil exits in the long-run Phil exits immediately, Will exits in the long-run
O Macmillan Learning Will, Jill, and Phil are all wheat farmers. The wheat industry is perfectly (purely) competitive. The first chart shows how much each farmer produces at different price levels. The second chart shows each farmer's minimum average total cost (ATC), average variable cost (AVC), and marginal cost (MC). Based on this data (assuming these three are the only producers), answer the questions that follow. Short-run quantity supplied Price Will Jill Phil $2.00 4 2 0 $4.00 6 4 $6.00 9 5 $8.00 12 8 246 Firm a. What is the cause of the divergence in the short-run Minimum ATC Will Jill Phil $2.50 $5.00 $7.00 and long-run supply curves? O changes in the market Minimum AVC Minimum MC $1.00 $2.00 $2.50 $0.50 $1.00 $2.00 government regulation Odiffering individual cost structures b. Suppose that the market price dips to $2.25 in the short run before ultimately settling at $2.50 per bushel. Who exits immediately, and who exits in the long-run when costs are no longer fixed? Jill exits immediately, Phil exits in the long-run Phil exits immediately, Will exits in the long-run
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:O Macmillan Learning
Will, Jill, and Phil are all wheat farmers. The wheat industry
is perfectly (purely) competitive. The first chart shows how
much each farmer produces at different price levels. The
second chart shows each farmer's minimum average total cost
(ATC), average variable cost (AVC), and marginal cost (MC).
Based on this data (assuming these three are the only
producers), answer the questions that follow.
Short-run quantity supplied
Price
Will
Jill
Phil
$2.00
4
2
0
$4.00
6
4
$6.00
9
5
$8.00
12
8
246
Firm
a. What is the cause of the divergence in the short-run
Minimum ATC
Will Jill Phil
$2.50 $5.00 $7.00
and long-run supply curves?
O changes in the market
Minimum AVC
Minimum MC
$1.00 $2.00 $2.50
$0.50 $1.00 $2.00
government regulation
Odiffering individual cost structures
b. Suppose that the market price dips to $2.25 in the
short run before ultimately settling at $2.50 per bushel.
Who exits immediately, and who exits in the long-run
when costs are no longer fixed?
Jill exits immediately, Phil exits in the long-run
Phil exits immediately, Will exits in the long-run
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