Draw supply and demand diagram for the corn market

Assignment Help Business Economics
Reference no: EM131009960

Consider the perfectly competitive Corn industry. It is initially in long run equilibrium at quantity Q0 and price P0.

a) Draw a supply and demand diagram for the Corn market showing this equilibrium.

b) Draw a diagram for a typical firm in its initial long run equilibrium, showing its Marginal Cost, Average Total Cost, and Long Run Average Cost curves. Are any profits being made by this firm?

c) A major use for Corn in Canada and the United States is to produce ethanol for use as a gasoline additive. Suppose that a new technology allows for the production of ethanol from trees, which is MUCH more efficient than producing ethanol from Corn. What happens to your diagram in part (a)? Use your diagram from part (b) to show how the firm reacts to this new situation. Are any profits being made by this firm? d) Explain how this industry adjusts to its new long run equilibrium using both the diagrams from parts (a) and (b). (You may assume that it is a constant cost industry)

Reference no: EM131009960

Questions Cloud

Is it general or firm-specific human capital : You run a company, GizmoNet, that produces gizmos. Gizmos hook onto Nintendo Game Boys (hand-held electronic game players), allowing users to access the Internet using wireless communication protocols. Is the training a good investment? Is it general..
Artificial intelligence corporation has two divisions : The "Artificial Intelligence (AI) Corporation" has two divisions: Manufacturing and Sales. When a new worker is hired both she and her supervisor are equally ignorant about her ability. There is no skill involved in making and marketing AI robots; ho..
Drastic cost reductions : In December 1998, after a year in which Asian demand for B.C. lumber had fallen dramatically, an article in The Globe and Mail had the following headline: “Drastic Cost Reductions Needed to Save 13 B.C. Sawmills”. Does this headline suggest that B.C...
Draw supply and demand diagram for the corn market : Consider the perfectly competitive Corn industry. It is initially in long run equilibrium at quantity Q0 and price P0. Draw a supply and demand diagram for the Corn market showing this equilibrium. Draw a diagram for a typical firm in its initial lon..
What are the economic profits for the greener way : The revenues and costs of The Greener Way, a lawn care business wholly owned by Mr. Albert Johnston are listed below. Lawn Mowing $63,000 Aeration $2,000 Labour Cost $30,000 Vehicle Costs $15,000 Lawnmower Maintenance $5,000 Debt-Service Costs $13,00..
What is the equilibrium market price the store will charge : A grocery store in a small town has a supply curve for oranges that is given by the equation P=1/10Q+1. The store faces a weekly demand curve for oranges given by P=16-2/5Q where price is measured in dollars and quantity is measure in bags of oranges..
Midwestern states experience unusually poor weather : Suppose the Corn producers throughout the Midwestern states experience unusually poor weather and so produce a smaller than normal harvest. Explain using a diagram how this harvest will affect Canadian Corn farmers?
Example of farmer and railroad tracks to explain bargaining : Ronald Coase used the example of a farmer and railroad tracks to explain bargaining. Sparks from trains running on tracks near farmland have the potential to set off fires in the fields. Consider the case where the law stipulated that railroads could..

Reviews

Write a Review

Business Economics Questions & Answers

  Tax policy that discourages investment

Suppose a country enacts a tax policy that discourages investment. As a result, the value of the parameter ¯s now goes to a smaller value ¯s ′. Assuming that the economy starts at its initial steady state, use the Solow model to explain what happens ..

  Decrease in income taxes would be expected

All else equal, a decrease in income taxes would be expected to

  Illustrate what are the monopolist''s profit-maximizing price

Illustrate what are the monopolist's profit-maximizing price and total output.

  Describes the market structure

Do some research and write a Topic Paper that describes the market structure in which a typical professional sports team in or outside the United States (e.g. New York Yankees, Kansas City Wizards, New Jersey Nets, Manchester United, etc.) operates. ..

  Firm sell in cournot equilibrium

Suppose firms compete in quantities. How much does each firm sell in Cournot equilibrium.

  What is marginal benefits and marginal costs

After paying the movie distributors and meeting all other noninterest expenses, the owner expects to net $2 per ticket sold. Construction costs are $1,000,000 per screen. What is marginal benefits and marginal costs.

  In what sense does the fed create money

In what sense does the Fed "create money"? Suppose that the minimum required reserve ratio for banks was 1/11. Also suppose that banks held no excess reserves and that currency in circulation was unchanged. What action in the Treasury bill market wou..

  Preferences over consumption and leisure

Consider the U.S economy compared to a European economy such as Germany. The data tell us that in the U.S, real GDP and real consumption (per person) are higher than in Germany. Moreover, Germans enjoy signi?cantly more vacation time each year. Assum..

  Logic of the ricardian view of government debt

Explain the logic of the Ricardian view of government debt and evaluating its practical relevance.

  What does this mean for your company

What does this mean for your company? What is the cross-price elasticity for your product? What type of goods are Good A and Good B?

  Financial statements are most impacted by him functions

What portions of the financial statements are most impacted by HIM functions? Why is it important for a health informatics or information professional to understand a financial statement? Why might a physician not want to release his or her financial..

  How can you explain this apparent inconsistency

smaller multiplier means that change in government purchases of goods and services, government transfers, or taxes necessary to close an inflationary or recessionary gap is larger. How can you explain this apparent inconsistency.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd