Question

Question 25 6 pts Clearly type out your answer to parts (A), (B) and (C) in the space provided. Retain all of your handwritten work for this question to be uploaded separately after you have completed the exam. Every farmer in the perfectly competitive market for almonds have the same long run cost function, where q is pounds of almonds: C = 10q - 2q? +(1/6)q3 (A) What is the market price for almonds per pound? (B) What is the number of farms in the market if demand is 10,000 pounds of almonds? (C) If there is a shortage of bees to pollinate the almond trees, what will happen to the supply of almonds, the number of firms and firm profits in the short run? (just explain - no specific numbers needed)

Answer 1

c)

(B 3 2 Number of firms (4) c=10q-2q +(46)4 Ac= loq-29 to 10,000 6 - 11666 6 a = 10-2q + 48h tu differentiating, and putting equal to zero! = AR - 2 + ²a (AY. - o sotre - 2 t yew firms. It will 3 x2 o 6 Average The average Cost is minimum dethr ehre where the 9=6 P = 10-2(6) + 1 (6) entry 10 - 12 + 1x6x6 * - lo- 12 + 6 16- 12 =TA

The cost of production is likely to rise when there is shortage of bees to pollinate. there will be fall in the supply or a supply curve will shift to left. Thus high cost will push up price as well.