Reference no: EM132479950
Short-run Firm Supply. Produce Pride, Inc., supplies sweet corn to canneries located throughout Ohio's corn belt region. Like many grain and commodity markets, the market for sweet corn is perfectly competitive. With $500,000 in fixed costs, the company's total and marginal costs per ton (Q) are:
TC = $500,000 + $400Q + $0.04Q2
MC = dTC/dQ = $400 + $0.08Q
A. Calculate the industry price necessary to induce short-run firm supply of 10,000 tons of sweet corn. 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 $2,000 per ton. Hint: if Price = MC in a perfectly competitive market, solve for Q at a price $2,000/ton.
C. Develop the average variable cost equation (AVC) for Produce Pride, Inc.