The coffee industry is comprised of many firms producing an identical product. Market demand and supply conditions are indicated in the left-hand panel of the figure below; the long-run cost curves of a representative coffee farmer are shown in the right-hand Currently, the market price for coffee is $2 per pound, and at that price consumers are purchasing 800,000 pounds of coffee per day. Using the graphs shown in the images find: a. How many pounds of coffee will each farmer produce if they want to maximize profits? b. How many farmers are currently serving the industry (fractional numbers are fine)? c. In the long run, what will the equilibrium price of coffee be? Briefly explain your answer.
The coffee industry is comprised of many firms producing an identical product. Market
Using the graphs shown in the images find:
a. How many pounds of coffee will each farmer produce if they want to maximize profits?
b. How many farmers are currently serving the industry (fractional numbers are fine)?
c. In the long run, what will the
An industry comprised of many firms producing an identical product ia a perfect competitive industry. A firm under perfect competition is a price taker and can sell any quantity of commodity at the market determined price.
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