# 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

Question
66 views

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 ?

check_circle

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.

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.

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...

### Want to see the full answer?

See Solution

#### Want to see this answer and more?

Solutions are written by subject experts who are available 24/7. Questions are typically answered within 1 hour.*

See Solution
*Response times may vary by subject and question.
Tagged in