Question

costs of producing Prod bushels AVC (dollars) ATC (dollars) MC (dollars) 0.80 е.00 1.00 248.00 85.00 63.33 55.00 51.00 0.00 20.80 e.00 4.86 7.50 48.00 56.00 65.00 75.00 44.80 54.80 Instructions: Enter your answers as a whole number. If you are entering any negative numbers be sure to In front of those numbers a. If the market price is $56.00 per bushel of wheat, and All chooses to produce wheat, how much will he pr maxtmize his profits in the short run? 4000 bushels per month b. Calculate Alrs monthly profits (express a loss as a negative number) if he chooses to produce the profit-m wheat at a price of $56.00 24003 c. Assume that the market price of wheat fails to $35.00 per bushe. How much wnest will All choose to proo maximize his profits in the short run?

Answer 1

shows Al's monthly costs of producing wheat Suppose the current market price of wheat s All's Wheat Production Costs Quantity bushels AVC (dollars ATC (dollars) MC (dollars) 500 $40.00 35.80 e.00 $248.00 85.00 63.33 0.00 20.00 1,508 2,508 3,500 31.00 32.67 34.86 7.50 49.33 41·00 4,800 50.00 56.00 65.60 75.08 ,808 44.00 54.00 Instructions: Enter your answers as a whole number. If you are entering any negative numbers be sure to in front of those numbers a. If the market price is $56.00 per bushel of wheat and All chooses to produce wheat, how much will he pr maxłmize hls profits in the short run Equilibrium condition is MR=MC. Price in perfect competition market equals to MR. So correct answer is 4000 bushels. At this output MC-MR 400 bushels per month b. Calculate Ali's monthly profits (express a loss as a negative number if he chooses to produce the profitnm Profit = TR-TC TR = Quantity * Price = 4000*$56 = $224,000 TC Qauntity * AC = 4000* $50 = $200,000 Profit $224,000 200,000 $24,000 $24003 c Assume that the market price of wheat fails to $35.00 per bushel. How much whest witf All choose to proq maximize hle profits in the shortrun? If the price is $35.00, the equilibrium quantity wll be2,500 bushels