Q. Assume that half of cost of producing wheat is rental cost of land (a fixed cost) and half is cost of labour and machines (a variable cost). If average total cost of producing wheat is $8 and cost of wheat is $6, illustrate what would you advise farmer to do?

Q. Assume that in 2001, cost of roses was $45 per dozen and 96,000 dozen were sold in Ohio. In 2002, cost of roses was still $45 per dozen, however total sales increased. Adjust graph below to show changes in market between 2001 and 2002.