Farm fresh, Inc, supplies sweet peas to canneries located throughout the Mississippi River Valley. Like many gain 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

A. Calculate the industry prices necessary to induce short-run quantities supplied by the firm of 5,000, 10,000, 15,000 tons of sweet 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 quantities supplied by the firm at industry prices of $200, $500 and $1,000 per ton.

Solution Preview

A. Calculate the industry prices necessary to induce short-run quantities supplied by the firm of 5,000, 10,000, 15,000 tons of sweet peas. Assume that MC>AVC at every point along the firm's marginal cost curve and that total costs include a normal profit.

In perfectly competitive market, a firm sets its output level ...

Solution Summary

Solution describes the steps to calculate the necessary industry price at which given quantity can be supplied by a perfectly competitive firm. It also calculates the quantities supplied by perfectly competitive firm at given set of prices.

The producer of a cosmetic product needs to decide the optimal price to charge and the optimal quantity to supply in the market. The demand function of the cosmetic product is given as QD = 40 - 2P, while the supply function of the cosmetic product is given as QS = 2P where P is price, QD is quantity demanded, and QS is quantity

Suppose the supply for good x is estimated by the following equation:
Q(x) supplied = 4 + 0.8P(x) - 0.2P(x)expcted - 0.4W
Where;
Q(x) supplied = quantitysupplied of x
P(x) = current average good of x
P(x) expected = expected price of good x
W = average wage rate
Suppose;
P(x) = $5
P(x) expected = $6
W = $4.5

Price per gallon $2.00 2.25 2.50 2.75 3.00 3.25 3.50
Quantity demanded 26 25 24 23 22 21 20
Quantitysupplied 16 20 24 28 32 36 40
(a) What is the equilibrium?
(b) If supply at every price is reduced by 10 gallons, what will the new equilibrium price be?
(

A competitive firm's short-run cost information is shown in the table below.
Output Marginal Cost Average Variable Cost Average Total Cost
0
1 $ 8.00 $ 8.00 $ 17.00
2 7.00 7.50 12.00
3

The equilibrium price for physiotherapy visits is $30 and the quantity utilized is 150 visits as a result of the demandand supply conditions in this diagram. The state legislature is concerned that the current price does not give the physiotherapists enough incentive to produce a high volume of services. A proposal has been m

Give Me a Pane, Inc., distributes window glass to hardware and building supply chains located throughout the Northeast. Like several grain and commodity markets, the market for common single-pane glass is perfectly competitive. The company's technology defines a marginal cost per pound of single-pane glass given by the relation: