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# Short-Run Firm Supply

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Farm Fresh Inc supplies sweet peas to canneries located throughout the Mississippi river Valley Like many grain and commodity markets, the market for sweet peas is perfectly competitive. With \$250,000 in fixed costs, the company's total and marginal costs per ton (Q) are
TC=4250,000 = \$200Q + \$0.02Q2 (2 = Square because In do not have the option)
MC = (triangle)TC/TraiangleQ =\$200+\$0.04Q

A. Calculate the industry price necessary to induce short-run firm supply of 5,000, 10,000, and 15,000 tones of sweat peas. Assume that MC> AVC at every point along the firm's marginal cost curve and that total costs include a normal profit.
B. Calculate short-run firm supply at industry prices of \$200, \$500 and 1,000 per ton.

The answers are A Q=5,000, P=\$400
Q=10,000, P=\$600
Q=15,000, P=\$800

P=\$200, Q=o
P=\$500, Q=7,500
P=1,000, Q=20,000

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