The effect of high cost of machinery, labor, and fertilizers in changing profit of farmers.
Explanation of Solution
In the short run, the lower resource
Perfect competitive market:
Price takers: If a firm is said to be a price taker, it will accept the prevailing price in the market.
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Chapter 22 Solutions
Economics: Private and Public Choice (MindTap Course List)
- Homework Consider the competitive market for steel. Assume that, regardless of how many firms are in the industry, every firm in the industry is identical and faces the marginal cost (MC), average total cost (ATC), and average variable cost (AVC) curves shown on the following graph. COSTS (Dollars per ton) PRICE (Dollars per ton) 100 90 70 80 50 40 30 100 20 90 0 80 70 60 50 40 30 20 The following graph shows the market demand for steel. 0 Use the orange points (square symbol) to plot the initial short-run industry supply curve when there are 20 firms in the market. (Hint: You can disregard the portion of the supply curve that corresponds to prices where there is no output since this is the industry supply curve.) Next, use the purple points (diamond symbol) to plot the short-run industry supply curve when there are 30 firms. Finally, use the green points (triangle symbol) to plot the short-run industry supply curve when there are 40 firms. D MC D ATC AVC D O 5 10 15 20 25 35 QUANTITY…arrow_forwardSuppose the market for peaches is perfectly competitive. The short-run average total cost and marginal cost of growing peaches for an individual grower are illustrated in the figure to the right. Assume that the market price for peaches is $28.00 per box. What is the profit-maximizing quantity for peach growers to produce? boxes. (Enter your response as an integer.) Price (dollars per box) 40- 36- 32- 28- 24- 20- 16- 12- 8- 4- 0 10 20 30 40 50 60 70 80 Output (boxes of peaches per day) MC ATC 90 100 oo Qarrow_forwardThe data in the following table give information about the price P (in dollars) for which a firm can sell a unit of output and the total cost of production, where quantity is q, total cost is C, marginal cost is MC, total revenue is R, marginal revenue is MR, and profit is T. Fill in the blanks in the following table. (Enter your responses using integers.) P= 60 P= 40 MC R MR R MR 100 |이 - 100 - 100 1 150 50 60 60 - 90 40 40 - 110 178 28 120 60 - 58 80 40 - 98 3 198 20 180 60 - 18 120 40 - 78 4 212 14 240 60 28 160 40 - 52 230 18 300 60 70 200 40 - 30 250 20 360 60 110 240 40 - 10 7 272 22 420 60 148 280 40 8 310 38 480 60 170 320 40 10 355 45 540 60 185 360 40 5 10 410 55 600 60 190 400 40 - 10 11 475 65 660 60 185 410 40 - 65 8 8 8 88888 88 8arrow_forward
- Microeconomicsarrow_forwardSuppose that Nike's Fortnite concert led to a huge spike in economic profit. Why is it likely that this profit would be temporary?arrow_forwardSuppose the quantity of apples supplied in yourmarket is 2,400. If there are 60 apple producers,each with identical cost structures, how manyapples does each producer supply to the market?arrow_forward
- Stuck on this Question for awhile Any help will be appreciated. Thanks! :)arrow_forwardThe curves show the marginal revenue (MR), marginal cost (MC), and average total cost (ATC) functions for a firm in a competitive market. Use the area tool to draw the area representing the maximum profit the firm could earn—that is, the profit the firm would earn if it produced the optimal quantity.arrow_forwardThe hardware industry is perfectly competitive. Currently the price of a hammer is $5 and there is a balance between the number of hammers purchased and the number of hammers manufactured. However, the minimum average total cost of hammers is $7.50. Which of these scenarios is most likely ? Select one: A. Firms will enter the industry and the price will fall to $4 B. Firms will enter the industry and the price will stay at $5 C. Firms will leave the industry but the price will stay at $5 D. Firms will leave the industry and the price will rise to $7.50arrow_forward
- Suppose you supply good X in a perfectly competitive market. To sell good X you rent a building for $30,000 per month and rent a machine for $20,000 per month. Those are your fixed costs. The variable cost per month is given in the table below: Quantity of good X Variable Cost (VC) Average Variable Cost (AVC) Average Total Cost (ATC) Marginal Cost (MC) 0 $0 1,000 $5,000 2,000 $8,000 3,000 $9,000 4,000 $14,000 5,000 $20,000 6,000 $33,000 7,000 $49,000 8,000 $72,000 9,000 $99,000 10,000 $150,000 a) Use blank spaces in the table above to calculate your average variable cost, average total cost, and marginal cost for each quantity of good X. b) There is free entry into this market, and anyone who enters will face the same costs as you do. If current market price of one unit of…arrow_forwardIf the price is P, the firm in a perfectly competitive market is making a profit when producing the profit maximizing quantity Q1. Why would this situation lead to new entrants? Why would this increase in the number of firms competing in the market lead this firm to reduce output to Q (depicted in the right panel)? INDUSTRY S S¹ FIRM Costs - Revenue MC ATC K P P AR = MR ــة p1 Q Q¹ Use the editor to format your answer Outputarrow_forwardF. Highgarden was the seat of House Tyrell and is the regional capital of the Reach, which is the most fertile part of Westeros, supplying the rest of the realm (especially King's Landing) with grain, fruit, wine, and livestock. Such large-scale agriculture industry has led to a competitive fertilizer market. Suppose the market for fertilizer in the Reach is perfectly competitive. Firms in the market are producing at their profit-maximizing output but are currently incurring economic losses. 1. How does the price of fertilizer compare to the average total cost and the marginal cost of producing fertilizer? 2. Draw two graphs, side by side, illustrating the present situation for the typical firm and for the market as a whole. 3. Assuming there is no change in either demand or the firms' cost curves, how will the market adjust in the long run? Explain what will happen in the long run to the price of fertilizer, marginal cost, average total cost, the quantity supplied by each firm, and…arrow_forward
- Microeconomics: Private and Public Choice (MindTa...EconomicsISBN:9781305506893Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage LearningEconomics: Private and Public Choice (MindTap Cou...EconomicsISBN:9781305506725Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage Learning