Answered: Potato prices at the farm level often…

Potato prices at the farm level often fluctuate widely in price. Discuss why these prices are so volatile given the elasticity of demand and supply and the characteristics of pure competition.

Microeconomics

13th Edition

ISBN:9781337617406

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter9: Perfect Competition

Section: Chapter Questions

Problem 10QP

See similar textbooks

Related questions

Q: Economic profits in a perfectly competitive industry will encourage entry of new firms, which will…

A: Perfectly competitive market is characterized by large number of firms.

Q: The term that must take the prevailing market price for its product. refers to a firm operating in a…

A: Perfectly competitive market: - it is a market condition where there are many buyers and many…

Q: The, competitive firm maximizes its profit by operating where:

A: Under perfect competition, individual firms have no control over price. Therefore, the firm’s…

Q: Suppose that a firm in a competitive market faces the following revenues and costs. The firm should…

A: Quantity Total Revenue($) Total Cost ($) Profit = TR - TC ($) 0 0 2 -2 1 6 5 -1 2 12 9 3 3…

Q: Identify the defining characteristics of a competitive market.

A: Perfect or pure competition is a form of market in which a large number of perfectly informed buyers…

Q: a perfectly competitive market over the long run, a. an increase in market demand or a decrease in…

A: Perfect competition market Perfect competition is a form of market where there is a large number of…

Q: Suppose the market equilibrium price of wheat is Rs.2 per bushel in a perfectly competitive…

A: Perfect competition is a market structure where there are many buyers and sellers selling…

Q: A market is said to be perfectly-competitive when: the market may be dominated by one or two major…

A: Note: Since you've asked multiple question, we will solve the first question for you. If you want…

Q: an

A: Accounting profit is the monetary costs being paid by a firm and the revenue received. It is…

Q: The figure below shows the supply and demand curves for a perfectly competitive industry. The market…

A: Equilibrium in the market occurs at the intersection of demand and supply curves.

Q: The figure below represents the short-run curves for TK Ltd, a popular Chinese cuisine restaurant.…

A: The above question is related to the concept of market structure. There are primarily two types of…

Q: The connection between marginal revenue and price depends on a business's competitive environment.…

A: Under perfect competition, there exists a large number of buyers and sellers. Each firm sells…

Q: The diagram below depicts the market for smart mobile phones for selected brands. Apple Iphone Price…

A: In a market, the value map is used to define the value of a specific firm in the market on the basis…

Q: Firms in a perfectly competitive industry maximize profits by: eliminating the…

A: The perfect competition is a market structure which is characterized by the presence of a large…

Q: Question 1 Which of the following characteristics is required for a perfectly competitive market?…

A: In a perfectly competitive market, no one has the market power to determine the price of the…

Q: “In a perfectly competitive market, firms always operate at the lowest per-unit cost." Is the…

A: A market(mkt) is said to be perfectly-competitive when there is a large number of buyers(b) and…

Q: If a competitive industry is currently losing money what can be expected to happen to the number of…

A: The perfect competitive market is a market where large number of buyers and sellers in the market,…

Q: In a perfectly competitive market, why can’t prices above the competitive equilibrium price prevail…

A: Perfectly competitive market A Perfectly competitive market is one in which a large number of buyers…

Q: Explain how market competition affect the mark –up in price setting and the fraction of the marginal…

A: If there is market competition then setting mark-up price will be affected a lot. Let's understand…

Q: It can be argued that ‘a sustained increase in the prices of a product and profitability of…

A: The market is a place where the buyers and sellers interacts with each other and the exchange of…

Q: of the following are characteristics of a perfectly competitive market except: -small firm size…

A: Marginal revenue is the additional total revenue earned with an additional unit of production.

Q: Consider the market for solar power. Assume the market is perfectly competitive and…

A: In a market, the imposition of tax on related goods will have a significant impact on the demand and…

Q: а. the price to consumers will fall and the innovative firm will gain market power b. the price to…

A: The perfect competition is the type of market which has a large number of buyers and sellers of…

Q: Consider the table at right showing the supply schedules for three competitive firms, each producing…

A: The industry-supply curve is the flat summation of the supply curves of the singular firms. It is…

Q: The following diagram shows the market demand for steel. Use the orange points (square symbol) to…

A: In a perfectly competitive market, there is a large number of small firms selling homogenous…

Q: Firms in a perfect competition market structure are price takers price makers very large in…

A: Pure or perfect competition could be a theoretical market structure during which the subsequent…

Q: Each of the statements shown is characteristic of a phase in the development of a competitive market…

A: A perfectly competitive firm is a price taker and can sell any quantity of the commodity at the…

Q: Perfect Competition in the Long Run and Efficiency Scenario Imagine a market where there is perfect…

A: Find: a) Explain how output, price, and profit are determined in your perfectly competitive market…

Q: draw a short run firm and industry competitive equilibriums for a perfectly competitive…

A: It is given that the alligator-farming industry is perfectly competitive and earns zero economic…

Q: What is the correct answer? In pure competition, if the market price of the product is lower than…

A: Pure competition is a showcasing circumstance wherein there are an enormous number of dealers of an…

Q: A market structure is defined in terms of the number and sizes of buyers and s market, the type of…

A: We know that, a perfect competitive ia a market where large number of buyer's and sellers producing…

Q: Draw a long-run supply curve for a competitive market with identicalfirms, and describe its…

A: The long‐run market supply curve is found by examining the responsiveness of short‐run market supply…

Q: The marginal cost of a firm: a. crosses total cost at its minimum. b. crosses average variable cost…

A: Meaning of Perfect Competition: The term perfect competition refers to the market under which…

Q: In perfect competition, the price of the product is determined where the industry Select one: a.…

A: A market with perfect competition is one with a large number of sellers and purchasers.Because all…

Q: All the supply of peppermint oil is produced from mint plants grown in one county by several…

A: In a market, supply of output depends upon various factors such as price, availability of resources,…

Q: Given the information on the graph below, a) find the firm's short-run output and profit for the…

A: Given graph In the graph given curves are marginal cost curve, average cost curve and average…

Q: Consider in perfectly competitive market the following demand and supply equations for sugar: Qd…

A: Answer Quantity demanded is the total demand for the products and services manufactured in an…

Q: in the long-run, firms that operate in perfectly competitive markets should expect to earn exonomic…

A: Perfect competitive market is a market structure characterized by large number of buyers and sellers…

Q: A product wheat is produced under perfect competitive market structure. The market demand and supply…

A: Equilibrium is established at such a price where quantity demanded equals quantity supplied.

Q: Please refer to the figure above. The competitive market player will produce ____ units of output.…

A: A perfectly competitive market is produce at a point where price is equal to MC From the figure,…

Q: The following diagram shows the market demand for steel. Use the orange points (square symbol) to…

A: Answer: The short-run supply curve of a firm is the rising part of the MC above the minimum of AVC.…

Q: In competitive markets economic profit becomes zero in the long-run. However, it is also possible…

A: In competitive markets, economic profit is zero, but with help of technological advancement, some…

Q: TC=100+20q+q2 MC=20+q2 assuming perfect competition If the price is $100 & there are 1,000…

A: The perfect competitive firm is a price taker and can sell any quantity of the commodity at the…

Q: How do firms that compete in four different markets structures determine profitability

A: Four different markets structures:- Perfect competition monopoly monopolistic competition Oligopoly…

Question

Potato prices at the farm level often fluctuate widely in price. Discuss why these prices are so volatile given the elasticity of demand and supply and the characteristics of pure competition.

Video Video

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

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.

Similar questions

= = 41. Suppose that the market for cigarettes is initially in equilibrium and is perfectly competitive. The demand curve can be expressed as P 60Qd; the supply curve can be expressed as P 0.5Qs. Quantity is expressed in millions of boxes per month. What are the amount traded and the price for this market? a) Q = 40; P = 20 b) Q = 20; P = 40 c) Q = 30; P = 30 d) Q = 30; P = 15
Suppose that over the short run (say the next 5 years), demand for OPEC oil is given by P = 165 – 2.5q. Here q is measured in millions of barrels a day. OPEC marginal cost per barrel is $15. What is OPEC’s optimal level of production? What is the prevailing price of oil at that level? Many experts contend that maximizing short-run profit is counterproductive for OPEC in the long run because high price reduces buyers to conserve energy and spur competition and new exploration that increases the overall supply of oil. Suppose that the demand curve just described will remain unchanged only if oil prices stabilize at $65 per barrel or below. If oil price exceeds this threshold, long run demand (over a second five year-period) will be curtailed to P = 135 – 2.5q. OPEC seeks to maximize its total profit over the next decade. What is the optimum output and price policy? (assume all values are present values)
Consider the perfectly competitive spice market. At the equilibrium price, the elasticity of market supply is 0.58 and the elasticity of demand is 2.26. An increase in production costs cause the market PRICE of spices to rise by 3%. What is the percentage change in market QUANTITY?
The short-run market demand and supply for Kente cloth are expressed as follows: Demand:P=40-0.25Q Supply: P=5+0.05Q Marginal cost: -20+4Q Find short run level of output.
Consider the market for solar power. Assume the market is perfectly competitive and initially in long-run equilibrium; solar power sells for $.25 per kwh (kilowatt hour, a unit of power). Next, to encourage conservation, Congress taxes all forms of energy EXCEPT solar power, causing an increase in the demand for solar Show what happens to the market and the firm in the short run; indicate clearly what happens to price, quantity, and profit.
Suppose that the development of a new drought-resistant hybrid seed corn leads to a 50 percent increase in the average yield per acre without increasing the cost to the farmers who use the new technology. If the producers in the corn production industry were price takers, what would happen to the following? a. the price of corn b. the profitability of corn farmers who quickly adopt the new technology c. the profitability of corn farmers who are slow to adopt the new technology d. the price of soybeans, a substitute product for corn
If the price is P, the firm in a perfectly competitive market is making a profit when producing the profit maximizing quantity Q1. Why would this situation lead to new entrants? Why would this increase in the number of firms competing in the market lead this firm to reduce output to Q (depicted in the right panel)? INDUSTRY S S¹ FIRM Costs - Revenue MC ATC K P P AR = MR ــة p1 Q Q¹ Use the editor to format your answer Output
Instructions: Answer to the best of your ability. Show all of your work, the details, excel tab. The Market for Good X is perfectly competitive, with market supply and own-price demand curves given as q_s=-25000 + 3000p q_d=135000-5000p a. Determine the equilibrium price and quantity in the market for good x. (Note: You are not anlayzing an individual firm here. You are analyzing the entire market). Suppose the individual firm's average total costs are dfined by TC=1/3q^3-3q^2+28q+2 b. What is the firm's demand curve (don't give me back the industry demand curve. The firm's demand curve is what I want.) c. find the profit maximizing level of output for the firm (I've given the marginal cost curve below). MC=q^2-6q+28 d. If this firm is making a profit (loss) how much is the profit (loss)?
Consider in perfectly competitive market the following demand and supply equations for sugar:Qd =1000-1000p where Q d is quantity demanded and Qs is quantity supplied. Qs=800+ 1000p Where P is the price of sugar per pound and Q is thousands of pounds of sugar. Identify market problem specifically at prices 0.2 per pound and what will be scientific recommendation you suggest to solve the identified market problem?
In a short-run competitive equilibrium, which of the following is always true? Profit equals zero. Profit can be negative, zero, or positive. Profit can be zero or positive, but not negative. Suppose that 6000 identical sellers each set their profit-maximizing output level at 20 units when price equals 55tk. Then what is the market quantity supplied at a price of 55tk? 200. 1,100. 1,20,000. 3,30,000.
The soybean industry is a constant cost industry. A new study revealing negative health effects of soymilk permanently decreases the number of buyers in the soybean market. Due to the decrease in demand, the equilibrium price of soybeans ______ in the long run, the equilibrium quantity of soybeans ______in the long run, and the number of firms in the market will _____ in the long run. Word Bank: Decreases, Decreases, Decreases, Increases, Increases, Increases, does not change, does not change, does not change.
A profit-maximizing firm in a competitive market is currently producing and selling 1000 units of output. It has an average revenue of $13, and an average cost of $8. What is its marginal revenue? How much economic profit does it make? Given the firm's economic profit, what is expected to happen in terms of market supply, and equilibrium price and quantity? Why?