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Farmer Dorr figures that her fixed costs are $2,000, and the relevant portion of her total cost curve is:
Thousands of Total Cost
Bushels (in thousands of dollars)
10 10.70
11 11.45
12 12.25
13 13.10
14 14.00
15 15.00
16 16.10
17 17.32
18 18.75
19 20.30
a) Calculate Farmer Dorr's schedules of average cost, marginal cost, total variable cost, and average variable cost.
b) If Farmer Dorr is a perfect competitor, what level of output should she produce, if the market price is:
(i) $1.50 (iii) $0.92
(ii) $1.00 (iv) $0.82
given the following : Constant $21,800 Std.error of Y Est. 4,500 R squared 0.7832 Observations # 22 X coefficient 11.75 Std.error of Coef.
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Draw the relevant diagrams for a typical farm, and for the market as a whole, when the market for wheat is in long run equilibrium. Assume the farm faces perfect completion. (hint,
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