Reference no: EM13835912
Farmer Brown grows peaches. The average total cost and marginal cost of growing peaches for an individual farmer are illustrated in the graph to the right.
Assume the market for peaches is perfectly competitive and that the market price is S26 per box. Also assume that farmer Brown is producing the amount of peaches that maximizes profits.
Use the rectangle drawing tool to shade in farmer Brown's profit. Properly label this shaded area.
Carefully follow the instructions above, and only draw the required objects.
The following table shows Fanner Parker's revenue, cost, and profit from wheat fanning:
|
Quantity
(bushels)
(Q)
|
Total
Revenue
(TR)
|
Total Cost
(TC)
|
Profit
(TR- TC)
|
Marginal
Revenue
(MR)
|
Marginal
Cost
(MC)
|
|
0
|
$0.00
|
51.00
|
S - 1.00
|
-
|
-
|
|
1
|
4.00
|
4.00
|
0.00
|
54.00
|
3.00
|
|
2
|
8.00
|
6.00
|
2.00
|
4.00
|
2.00
|
|
3
|
12.00
|
7.50
|
4.50
|
4.00
|
1.50
|
|
4
|
16.00
|
9.50
|
6.50
|
4.00
|
2.00
|
|
5
|
'2000
|
17 no
|
R00
|
4 00
|
2 50
|
|
6
|
24.00
|
16.00
|
8.00
|
4.00
|
4.00
|
|
7
|
28.00
|
20.50
|
7.50
|
4.00
|
4.50
|
|
8
|
32.00
|
27.50
|
4.50
|
4.00
|
7.00
|
|
9
|
36.00
|
37.00
|
-1.00
|
4.00
|
9.50
|
|
10
|
40.00
|
49.50
|
-9.50
|
4.00
|
12.50
|
Farmer Parker's profit-maximizing level of production is 6 bushels of wheat. At this level of production he produces following the rule Marginal Revenue = Marginal Cost and earns the maximum possible profit of $8.00.
Farmer Parker's fixed costs are$___. (Enter your response rounded to two decimal places.)
Suppose that fixed costs increase by S0.50.
Fanner Parker's new profit-maximizing level of production after the increase in fixed costs is _______bushels of wheat.
The amount of profit that Farmer Parker will earn after the increase in fixed costs is $____. (Enter your response rounded to two decimal places.)
Lauren grows grapes. Her average variable cost (Alt), average total cost (ATC), and marginal cost (MC) of production are illustrated in the figure to the right.
Assume the market for grapes is perfectly competitive and that the market price is S2.00
per crate.
Characterize Lauren's economic profits. Assume she produces such that she maximizes profits in the short run.
Using the rectangle drawing tool, shade in Lauren's economic profits. Attach the correct label to indicate whether she is earning a profit (Profit) or incurring a loss (Loss).
Carefully follow the instructions above, and only draw the required object.
