Farm fresh corporation supplies sweet peas to canneries, Ask an Expert

Economics

Farm Fresh Inc supplies sweet peas to canneries located throughout the Mississippi river Valley Like many grain and commodity markets, the market for sweet peas is perfectly competitive. With $250,000 in fixed costs, the company's total and marginal costs per ton (Q) are
TC=4250,000 = $200Q + $0.02Q2 (2 = Square because In do not have the option)
MC = (triangle)TC/TraiangleQ =$200+$0.04Q

A. Calculate the industry price necessary to induce short-run firm supply of 5,000, 10,000, and 15,000 tones of sweat peas. 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 $200, $500 and 1,000 per ton.

The answers are A Q=5,000, P=$400
Q=10,000, P=$600
Q=15,000, P=$800

B answers
P=$200, Q=o
P=$500, Q=7,500
P=1,000, Q=20,000

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Macroeconomics, Economics

Category:- Macroeconomics
Reference No.:- M9293746

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