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Q. Assume which the market for avocados is perfectly competitive. The typical agribusiness firm is earning positive economic profit in the short-run equilibrium.
(a) Draw a correctly labeled graph for the typical agribusiness firm, illustrating the short-run equilibrium also labeling the equilibrium market price also output PE also QE, particularly.
(b) Assume there is an increase in the market wage rate for labor, a variable input. Elucidate how on your graph in part (a) the effect of the wage increase on the marginal cost curve in the short run.
(c) Assume which avocado producers hire workers from a perfectly competitive labor market. Draw a graph of labor supply also demand for the typical agribusiness firm also label the supply curve MFC also the demand curve MRP. Assume the market wage rate increases from w1 to w2. Elucidate how the effect of the wage increase on the graph, labeling the initial quantity of labor hired QL1 also the new quantity of labor hired QL2.
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