Reference no: EM131617719

Consider the following opinion expressed by a farmer:

"All this talk about businesses wanting to maximise profits doesn't hold water for me. As a farmer who has a 30 year history of growing vegetables in the Adelaide Hills, I have found that most years I was lucky if I met my weekly wage bill and other incidental costs. Most of my time was spent watching for new vegetables that were doing well in the market so that I could switch production to them. Unfortunately other growers were doing the same thing and so, by harvest time I was back trying to find enough sales revenue to meet those weekly costs again! How can you maximise profits when the revenue side of your business is captive to the fixed price you get in the market and the size of your fields? The only small growers who seem to survive over time are those who sell out to the larger food conglomerates and any profits they seem to make come from their ability to reduce their costs by farming on a large scale."

Use your understanding of the meaning of profits and the objective of profit maximisation to explain the conditions that govern survival vs shutdown for a price-taking firm in the short run. Pass comment as well on the grower's view that survivability of price-taking firms depends on minimising costs in the long run.