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    Calculating Profit Maximizing Output for a Sugar Farmer.

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    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?

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    Solution Preview

    The sugar market is clearly perfectly competitive.

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