Homework Help is Here – Start Your Trial Now!
Business
Economics
You are economic consultant for Jack, who farms raw cotton in a perfectly competitive market. One day he gives you the following data at his present level of production: Output = 1250 pounds, market price = $2.00, total cost =$7500, fixed cost3D$5625, marginal cost=$2. The minimum of AVC occurs at {1000 pounds at $1} and the minimum of ATC at {1600 pounds at $4}. Please help Jack with the following questions based on the above figures: (a) Is Jack making positive profit? Please calculate total profit/loss (b) Draw a graph for the raw cotton market and a graph for Jack's farm current situation that includes MC, ATC, and AVC, labeling all relevant points on axes with numerical values. Label the total profit/loss area (c) What is the average variable cost at the profit maximizing quantity of 1250? (d) Suppose more farmers exit the raw cotton market until the market price is $3.00 per pound. On the same graphs in (b) above, show the effect of this change in the market price

You are economic consultant for Jack, who farms raw cotton in a perfectly competitive market. One day he gives you the following data at his present level of production: Output = 1250 pounds, market price = $2.00, total cost =$7500, fixed cost3D$5625, marginal cost=$2. The minimum of AVC occurs at {1000 pounds at $1} and the minimum of ATC at {1600 pounds at $4}. Please help Jack with the following questions based on the above figures: (a) Is Jack making positive profit? Please calculate total profit/loss (b) Draw a graph for the raw cotton market and a graph for Jack's farm current situation that includes MC, ATC, and AVC, labeling all relevant points on axes with numerical values. Label the total profit/loss area (c) What is the average variable cost at the profit maximizing quantity of 1250? (d) Suppose more farmers exit the raw cotton market until the market price is $3.00 per pound. On the same graphs in (b) above, show the effect of this change in the market price

Economics:
Economics:
10th Edition
ISBN:9781285859460
Author:BOYES, William
Publisher:BOYES, William
Chapter22: Supply: The Costs Of Doing Business
Section: Chapter Questions
Problem 14E
See similar textbooks
icon
Related questions
Question
You are economic consultant for Jack, who farms raw cotton in a perfectly competitive market. One day he gives you the following data at his present level of production: Output = 1250 pounds, market price = $2.00, total cost =$7500, fixed cost=D$5625, marginal cost=$2. The minimum of AVC occurs at {1000 pounds at $1} and the minimum of ATC at {1600 pounds at $4}. Please help Jack with the following questions based on the above figures: (a) Is Jack making positive profit? Please calculate total profit/loss (b) Draw a graph for the raw cotton market and a graph for Jack's farm current situation that includes MC, ATC, and AVC, labeling all relevant points on axes with numerical values. Label the total profit/loss area (c) What is the average variable cost at the profit maximizing quantity of 1250? (d) Suppose more farmers exit the raw cotton market until the market price is $3.00 per pound. On the same graphs in (b) above, show the effect of this change in the market price A- !! 三 U X2 x2 </> の étv MacBook Pro G Search or type URL +,
Transcribed Image Text:You are economic consultant for Jack, who farms raw cotton in a perfectly competitive market. One day he gives you the following data at his present level of production: Output = 1250 pounds, market price = $2.00, total cost =$7500, fixed cost=D$5625, marginal cost=$2. The minimum of AVC occurs at {1000 pounds at $1} and the minimum of ATC at {1600 pounds at $4}. Please help Jack with the following questions based on the above figures: (a) Is Jack making positive profit? Please calculate total profit/loss (b) Draw a graph for the raw cotton market and a graph for Jack's farm current situation that includes MC, ATC, and AVC, labeling all relevant points on axes with numerical values. Label the total profit/loss area (c) What is the average variable cost at the profit maximizing quantity of 1250? (d) Suppose more farmers exit the raw cotton market until the market price is $3.00 per pound. On the same graphs in (b) above, show the effect of this change in the market price A- !! 三 U X2 x2 </> の étv MacBook Pro G Search or type URL +,
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 4 steps with 1 images

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Inputs
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.
Recommended textbooks for you
Economics:
Economics:
Economics
ISBN:
9781285859460
Author:
BOYES, William
Publisher:
Cengage Learning
Microeconomics: Principles & Policy
Microeconomics: Principles & Policy
Economics
ISBN:
9781337794992
Author:
William J. Baumol, Alan S. Blinder, John L. Solow
Publisher:
Cengage Learning
Microeconomic Theory
Microeconomic Theory
Economics
ISBN:
9781337517942
Author:
NICHOLSON
Publisher:
Cengage
Microeconomics A Contemporary Intro
Microeconomics A Contemporary Intro
Economics
ISBN:
9781285635101
Author:
MCEACHERN
Publisher:
Cengage
Micro Economics For Today
Micro Economics For Today
Economics
ISBN:
9781337613064
Author:
Tucker, Irvin B.
Publisher:
Cengage,
Survey Of Economics
Survey Of Economics
Economics
ISBN:
9781337111522
Author:
Tucker, Irvin B.
Publisher:
Cengage,
SEE MORE TEXTBOOKS