Explore BrainMass

Calculating Profit Maximizing Output for a Sugar Farmer.

Suppose the market price of sugar is 22 cents per pound. If a sugar farmer produces 100,000 pounds, the marginal cost of sugar is 30 cents per pound. Is the farmer maximizing profit? If not, should the farmer produce more or less sugar?

Solution Preview

The sugar market is clearly perfectly competitive.

We know that the profix maximizing rule for perfect competitors is price = marginal ...