Suppose Crusaders Corn is a company in a competitive industry of corn production. If it currently...

Suppose Crusaders Corn is a company in a competitive industry of corn production. If it currently produces 500 bushels of corn, its average total cost at 500 output is $4 per bushel, and the market price is $5 per bushel. Its profit is

	a.	$500.
	b.	$4,500.
	c.	−$2,000.
	d.	$2,500.

Expert Solution

Ans

Formula

profit (π) = Total Revenue (TR) - Total cost (TC)

In this

TR = outputs × Market Price = 500 × 5 = 2500

TC = Output × Averages Total Cost = 500 × 4 = 2000

So

Profits = TR - TC = 2500 - 2000 = 500

Hence option a) $500 right.

Rahul Sunny answered 2 years ago

Describe the long-run outcome for a competitive corn producer and the competitive corn industry. Now suppose...

Describe the long-run outcome for a competitive corn producer and the competitive corn industry. Now suppose that the demand for corn increases. a. Discuss the adjustments by the firm and the industry. Explain. b. What happens to the firm’s long-run economic profit? Explain.

Suppose corn producers are in a perfectly competitive industry where all the firms are identicj with...

Suppose corn producers are in a perfectly competitive industry where all the firms are identicj with identical cost curves. In this industry the market price for a bushel of corn is $400. Suppose that a representative firm’s total cost is given by the equation TC=500 + q2 + 200q where q is the quantity of output produced by an individual firm. The firms MC curve equation based upon its TC curve equation is MC =2q + 200. Given this information...

consider a closed economy. suppose the market for corn in banana republic is competitive. the domestic...

consider a closed economy. suppose the market for corn in banana republic is competitive. the domestic market demand function for corn is Qd=18-P and the domestic market supply function is Qs=P-2, both measured in billions of bushels per year. in order to help the corn industry, the government initiated a price support program by purchasing 2 billion bushels corn in the market a)Draw a graph to show the market equilibrium price and quantity. Identify the area of dead weight loss...

consider a small open economy. Suppose the market for corn in banana republic is competitive. The...

consider a small open economy. Suppose the market for corn in banana republic is competitive. The domestic market demand function for corn is Qd= 10-0.5P and trhe domestic market supplu function is Qs= P-2, both measured and billions of bushel per year. Also assume the import supply curve is infinitely elastic at a price of four dollars per bushel. a) suppose the government imposes a tariff of two dollars per bushel. What will the new equilibrium price and quantity be?...

Suppose the home construction industry is perfectly competitive. When the industry expands or contracts in the...

Suppose the home construction industry is perfectly competitive. When the industry expands or contracts in the long run, the minimum possible average cost of home building remains fixed at $50 per square foot. Suppose the industry is currently in equilibrium. If the demand for housing decreases, a. the price of home construction will fall both in the short run and the long run. b. the price of home construction won't fall in the short run, but will fall in the...

Suppose the industry is currently unregulated and there are only 2 firms in the industry. Both...

Suppose the industry is currently unregulated and there are only 2 firms in the industry. Both firms are emitting 1,100 tons of pollution, thus total pollution in the industry is 2,200 tons. The marginal cost of pollution reduction for the 2 firms are: MCR1=1.35Q1andMCR2=0.85Q2 Now, suppose the government issued 700 permits to each firm (total pollution allowed in industry is 1,400 tons) after trading what is the amount of pollution firm 1 will reduce?

Suppose you are currently working as an economic advisor for the Texas Corn Producers Association. Recently,...

Suppose you are currently working as an economic advisor for the Texas Corn Producers Association. Recently, there has been a string of published health reports and national campaigns documenting the negative health impacts of consuming products made with corn syrup. At the same time, suppose there have been significant advancements in both seed technology and harvesting techniques that have significantly reduced the cost of producing corn. You have been tasked with preparing a brief report about what is going to...

In a perfectly competitive industry, the market price is $25. A firm is currently producing 10,000...

In a perfectly competitive industry, the market price is $25. A firm is currently producing 10,000 units of output, its average total cost is $28, its marginal cost is $20, and its average variable cost is $20. Given these facts, explain whether the following statements are true or false: a. The firm is currently producing at the minimum average variable cost b. The firm should produce more output to maximize its profit c. Average total cost will be less than...

A firm in a purely competitive industry is currently producing 1,200 units per day at a...

A firm in a purely competitive industry is currently producing 1,200 units per day at a total cost of $500. If the firm produced 1,000 units per day, its total cost would be $350, and if it produced 700 units per day, its total cost would be $325. a. What are the firm's ATC at these three levels of production? At 1,200 units per day, ATC = $0.45 At 1,000 units per day, ATC = $0.35 At 700 units...

In a perfectly competitive industry the market price is $25. A firm is currently producing 10,000...

In a perfectly competitive industry the market price is $25. A firm is currently producing 10,000 units of output; average total cost is $28, marginal cost is $20, and average variable cost is $20. The firm should Select one: a. raise price because the firm is losing money. b. keep output the same because the firm is producing at minimum average variable cost. c. produce more because the next unit of output increases profit by $5. d. produce less because...

Question