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

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Answer 1

Question

Chapter 9, 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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16:10 ← BEC 3701 - Assignments-... KWAME NKRUMAH UNIVERSITY TEACHING FOR EXCELLENCE SCHOOL OF BUSINESS STUDIES DEPARTMENT OF ECONOMICS AND FINANCE ADVANCED MICRO-ECONOMICS (BEC 3701) Assignments INSTRUCTIONS: Check instructions below: LTE 1) Let u(q1,q2) = ln q₁ + q2 be the (direct) utility function, where q₁ and q2the two goods. Denote P₁ and P2 as the prices of those two goods and let M be per period money income. Derive each of the following: a) the ordinary or Marshallian demand functions q₁ = d₂ (P₁, P₂, M) for i = 1,2 [3 Marks] b) the compensated or Hicksian demand functions q₁ = h₂ (P₁, P2, M) for i = 1,2 [3 Marks] c) the Indirect Utility Function uº = v(P₁, P2, M) [3 Marks] d) the Expenditure Function E(P1, P2, U°) [3 Marks] e) Draw a diagram of the solution. There should be two graphs, one above the other; the first containing the indifference curves and budget constraint that characterize the solution to the consumer's choice problem; the second characterizing the demand…

Answer 2

Question

Chapter 9, 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 9, 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 9, 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 5

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