CHAPTER EIGHT I Perfect Competition18. The following graph shows the output for Pat, a profit-maximizing corn farmerМCАТC81AVC2I1048161220Quantity (tonnes per year)a. Suppose the corn market consists of 1000 farms, including and identical toPat's. In the table below, determine the market supply in column 2b. If the market demand for corn is as shown in column 3 of the table below, atequilibrium price how much will Pat produce? Is she generating a profit or a loss?How much will the market produce? Is the market generating a profit or a loss?(3)(2)(1)Market Supply(tonnes per year)Market DemandPrice(tonnes per year)($)19 O00215 000412 000610 00087 00010Givennhe resuits from part (b), what will happen to the corn market in thelong tun nnerPrice and Cost(S per unit)10CO

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Asked Nov 15, 2019
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The following graph shows the output for Pat, a profit-maximizing corn farmer.

 

1. Suppose the corn market consists of 1000 farms, including and identical to Pat's. In the table below determince the supply in column 2.

 

2. If the market demand for corn is shown in column 3 of the table below, at equilibrium price how much will Pat produce? Is she generating a profit or a loss ? How much will the market produce? Is the market genearting a profit or a loss ?

3. Given the results from part (b), what will happen to the corn market in the long run ?

CHAPTER EIGHT I Perfect Competition
18. The following graph shows the output for Pat, a profit-maximizing corn farmer
МC
АТC
8
1
AVC
2
I
1
0
4
8
16
12
20
Quantity (tonnes per year)
a. Suppose the corn market consists of 1000 farms, including and identical to
Pat's. In the table below, determine the market supply in column 2
b. If the market demand for corn is as shown in column 3 of the table below, at
equilibrium price how much will Pat produce? Is she generating a profit or a loss?
How much will the market produce? Is the market generating a profit or a loss?
(3)
(2)
(1)
Market Supply
(tonnes per year)
Market Demand
Price
(tonnes per year)
($)
19 O00
2
15 000
4
12 000
6
10 000
8
7 000
10
Givennhe resuits from part (b), what will happen to the corn market in the
long tun nner
Price and Cost
(S per unit)
10
CO
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CHAPTER EIGHT I Perfect Competition 18. The following graph shows the output for Pat, a profit-maximizing corn farmer МC АТC 8 1 AVC 2 I 1 0 4 8 16 12 20 Quantity (tonnes per year) a. Suppose the corn market consists of 1000 farms, including and identical to Pat's. In the table below, determine the market supply in column 2 b. If the market demand for corn is as shown in column 3 of the table below, at equilibrium price how much will Pat produce? Is she generating a profit or a loss? How much will the market produce? Is the market generating a profit or a loss? (3) (2) (1) Market Supply (tonnes per year) Market Demand Price (tonnes per year) ($) 19 O00 2 15 000 4 12 000 6 10 000 8 7 000 10 Givennhe resuits from part (b), what will happen to the corn market in the long tun nner Price and Cost (S per unit) 10 CO

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Expert Answer

Step 1

A firm’s short run supply function is the increasing part of its short run marginal cost curve above the minimum of its average variable cost.

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MC 10 ATC AVC 12 16 20 8 Quantity (tonnes per year) Price and cost

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Step 2

Pat’s supply function is the increasing part of marginal cost curve above the minimum of its average variable cost as shown in figure.

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Supply (tonnes per year) 4 Price (S) 2 4 6 12 16 10 20

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Step 3

The market supply curve is just the horizontal sum of the marginal cost curves of all the individual firms belonging to the market.

Since the corn m...

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Price (S Market Supply (tonnes per year) Market demand (tonnes per year) 2 4000 19000 4 8000 15000 6 12000 12000 8 16000 20000 10000 10 7000

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