The effect of high cost of machinery, labor, and fertilizers in changing profit of farmers.

Question

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Answer 1

Question

Chapter 22, Problem 1CQ

To determine

The effect of high cost of machinery, labor, and fertilizers in changing profit of farmers.

Expert Solution & Answer

Explanation of Solution

In the short run, the lower resource price will make profit in the market. This is because in the short run only a small number of firms share the market share and they will sell the product above their average cost. However, in the long run, many firms are sharing the market share because of the non-barriers to entry. Then, the profit in the market becomes zero due to the decrease in demand, which resulted from excess supply of goods. Also, the earnings from the production will only cover the cost. Therefore, lowering the resources price will not change the market profit in the long run. However, it will help the farmers to survive in the market. This is because in the long run, the firms with the highest cost of product can easily drive out from the market.

Economics Concept Introduction

Perfect competitive market: Perfect competition is the market with large number of sellers and buyers dealing with identical products.

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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Students have asked these similar questions

A profit-maximizing firm in a competitive market is currently producing and selling 1000 units of output. It has an average revenue of $13, and an average cost of $8. What is its marginal revenue? How much economic profit does it make? Given the firm's economic profit, what is expected to happen in terms of market supply, and equilibrium price and quantity? Why?

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= = 41. Suppose that the market for cigarettes is initially in equilibrium and is perfectly competitive. The demand curve can be expressed as P 60Qd; the supply curve can be expressed as P 0.5Qs. Quantity is expressed in millions of boxes per month. What are the amount traded and the price for this market? a) Q = 40; P = 20 b) Q = 20; P = 40 c) Q = 30; P = 30 d) Q = 30; P = 15

Answer 2

Question

Chapter 22, Problem 1CQ

To determine

The effect of high cost of machinery, labor, and fertilizers in changing profit of farmers.

Expert Solution & Answer

Explanation of Solution

In the short run, the lower resource price will make profit in the market. This is because in the short run only a small number of firms share the market share and they will sell the product above their average cost. However, in the long run, many firms are sharing the market share because of the non-barriers to entry. Then, the profit in the market becomes zero due to the decrease in demand, which resulted from excess supply of goods. Also, the earnings from the production will only cover the cost. Therefore, lowering the resources price will not change the market profit in the long run. However, it will help the farmers to survive in the market. This is because in the long run, the firms with the highest cost of product can easily drive out from the market.

Economics Concept Introduction

Perfect competitive market: Perfect competition is the market with large number of sellers and buyers dealing with identical products.

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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Answer 3

Question

Chapter 22, Problem 1CQ

To determine

The effect of high cost of machinery, labor, and fertilizers in changing profit of farmers.

Expert Solution & Answer

Explanation of Solution

In the short run, the lower resource price will make profit in the market. This is because in the short run only a small number of firms share the market share and they will sell the product above their average cost. However, in the long run, many firms are sharing the market share because of the non-barriers to entry. Then, the profit in the market becomes zero due to the decrease in demand, which resulted from excess supply of goods. Also, the earnings from the production will only cover the cost. Therefore, lowering the resources price will not change the market profit in the long run. However, it will help the farmers to survive in the market. This is because in the long run, the firms with the highest cost of product can easily drive out from the market.

Economics Concept Introduction

Perfect competitive market: Perfect competition is the market with large number of sellers and buyers dealing with identical products.

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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Answer 4

Question

Chapter 22, Problem 1CQ

To determine

The effect of high cost of machinery, labor, and fertilizers in changing profit of farmers.

Expert Solution & Answer

Explanation of Solution

In the short run, the lower resource price will make profit in the market. This is because in the short run only a small number of firms share the market share and they will sell the product above their average cost. However, in the long run, many firms are sharing the market share because of the non-barriers to entry. Then, the profit in the market becomes zero due to the decrease in demand, which resulted from excess supply of goods. Also, the earnings from the production will only cover the cost. Therefore, lowering the resources price will not change the market profit in the long run. However, it will help the farmers to survive in the market. This is because in the long run, the firms with the highest cost of product can easily drive out from the market.

Economics Concept Introduction

Perfect competitive market: Perfect competition is the market with large number of sellers and buyers dealing with identical products.

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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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 22, Problem 1CQ

To determine

The effect of high cost of machinery, labor, and fertilizers in changing profit of farmers.

Expert Solution & Answer

Explanation of Solution

In the short run, the lower resource price will make profit in the market. This is because in the short run only a small number of firms share the market share and they will sell the product above their average cost. However, in the long run, many firms are sharing the market share because of the non-barriers to entry. Then, the profit in the market becomes zero due to the decrease in demand, which resulted from excess supply of goods. Also, the earnings from the production will only cover the cost. Therefore, lowering the resources price will not change the market profit in the long run. However, it will help the farmers to survive in the market. This is because in the long run, the firms with the highest cost of product can easily drive out from the market.

Economics Concept Introduction

Perfect competitive market: Perfect competition is the market with large number of sellers and buyers dealing with identical products.

Price takers: If a firm is said to be a price taker, it will accept the prevailing price in the market.

Answer 6

Chapter 22, Problem 1CQ

To determine

The effect of high cost of machinery, labor, and fertilizers in changing profit of farmers.

Expert Solution & Answer

Explanation of Solution

In the short run, the lower resource price will make profit in the market. This is because in the short run only a small number of firms share the market share and they will sell the product above their average cost. However, in the long run, many firms are sharing the market share because of the non-barriers to entry. Then, the profit in the market becomes zero due to the decrease in demand, which resulted from excess supply of goods. Also, the earnings from the production will only cover the cost. Therefore, lowering the resources price will not change the market profit in the long run. However, it will help the farmers to survive in the market. This is because in the long run, the firms with the highest cost of product can easily drive out from the market.

Economics Concept Introduction

Perfect competitive market: Perfect competition is the market with large number of sellers and buyers dealing with identical products.

Price takers: If a firm is said to be a price taker, it will accept the prevailing price in the market.

Answer 7

Chapter 22, Problem 1CQ

To determine

The effect of high cost of machinery, labor, and fertilizers in changing profit of farmers.

Answer 8

Expert Solution & Answer

Explanation of Solution

In the short run, the lower resource price will make profit in the market. This is because in the short run only a small number of firms share the market share and they will sell the product above their average cost. However, in the long run, many firms are sharing the market share because of the non-barriers to entry. Then, the profit in the market becomes zero due to the decrease in demand, which resulted from excess supply of goods. Also, the earnings from the production will only cover the cost. Therefore, lowering the resources price will not change the market profit in the long run. However, it will help the farmers to survive in the market. This is because in the long run, the firms with the highest cost of product can easily drive out from the market.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Economics Concept Introduction

Perfect competitive market: Perfect competition is the market with large number of sellers and buyers dealing with identical products.

Price takers: If a firm is said to be a price taker, it will accept the prevailing price in the market.

Answer 12

Ch. 22 - Prob. 1CQ Ch. 22 - Prob. 2CQ Ch. 22 - Prob. 3CQ Ch. 22 - Prob. 4CQ Ch. 22 - Prob. 5CQ Ch. 22 - Suppose that the development of a new...Ch. 22 - Prob. 7CQ Ch. 22 - Prob. 8CQ Ch. 22 - Prob. 9CQ Ch. 22 - Prob. 10CQ

The effect of high cost of machinery, labor, and fertilizers in changing profit of farmers.

The effect of high cost of machinery, labor, and fertilizers in changing profit of farmers.

Explanation of Solution

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