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1. A Canadian farm family is growing "rapeseed," also referred to as canola, which will be processed into canola oil and shipped to US markets where fast-food restaurants and consumers are using vast quantities of the product. Canadian farmers generally operate in a perfectly competitive market.
a. Explain the concept of a "price-taker" and how a Canadian farmer is relegated to the role of a price-taker.
b. Explain how a canola farm family perceives the demand curve for their product given their role as price-takers.
c. Explain why a profit-maximizing farm family would have a supply curve that was identical to the marginal cost curve of the operation.
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