Who farms raw cotton in perfectly competitive market

Assignment Help Business Economics

Reference no: EM131101700

You are economic consultant for Jack, who farms raw cotton in a perfectly competitive market. One day he gives you the following data at his present level of production:

Output = 2000 pounds, market price = $5.00, total cost =$8000, fixed cost=$2000, marginal cost=$5. The minimum of AVC occurs at {1000 pounds at $2} and the minimum of ATC at {1500 pounds at $3.5}. Please help Jack with the following questions based on the above figures:

A. Draw a graph for the raw cotton market and a graph for Jacks farm current situation that includes MC, ATC, and AVC, labeling all relevant points on axes with numerical values. Is Jack maximizing the profit (minimizing the loss)? Why or why not? Label the total profit/loss area.

B. Suppose more farmers enter the raw cotton market until the market price is $3.00 per pound. On the same graphs, show the effect of this change in the market place. Would you like to suggest Jack leaving the market in the short run? Explain your answer.

Reference no: EM131101700

Questions Cloud

Contemporary technologies to enhance services : We use a number of contemporary technologies to enhance services that we provide for our customers. One such technology known as ____________ allows us to observe and track products and services in transport.

As information technology has grown in sophistication : As information technology has grown in sophistication, IT professionals have learned how to utilize ____________ for better decision making. They now look for patterns in the collected data that allow us to make better marketing decisions.

Wage pass-through to internalize insurance benefits : using "Wage pass-through" to internalize insurance benefits mean. IF an employee has "firm specific" talents and abilities this means that. indemnity insurance provided incentive for

Write a program to simulate the motion of the robot : Write a program to simulate the motion of the robot using the equations from class. You should assume that the robot changes its wheel velocities instantaneously

Who farms raw cotton in perfectly competitive market : You are economic consultant for Jack, who farms raw cotton in a perfectly competitive market. One day he gives you the following data at his present level of production: Draw a graph for the raw cotton market and a graph for Jacks farm current situat..

Business policy and strategy-industry economic features : Industry Economic Features—What are the industry’s dominant economic features? Industry Competitive Forces—What causes the industry competitive structure and business environment to change? Industry KSF’s—What are the key success factors for future c..

Show model with highly inelastic supply curve : Show a model with a highly inelastic Supply Curve (such as rental units in New York City). Show the effects of a price ceiling on this market. Show: Note any deadweight loss due to the price ceiling. Is it more or less than the standard model?

Religion does not permit them to use birth control measures : How would you classify people that have religious beliefs or their religion does not permit them to use birth control measures? This can affect the validity of your experiment.

Budget line in consumption and leisure decision problem : One of the policies was to put a tax on people who didn’t buy health insurance. That is, if their wage was w before and now they don’t buy insurance then they receive only a fraction of the previous wage, so (1 − t)w. Show how this affects the budget..

User Account

All Pages