6. The market for fertilizer is perfectly competitive. Firms in the market are producing output but are currently incurring economic losses. a. How does the price of fertilizer compare to the average total cost, the average variable cost, and the marginal cost of producing fertilizer? b. Draw two graphs, side by side, illustrating the present situation for the typical firm and for the market. c. Assuming there is no change in either demand or the firms’ cost curves, explain what will happen in the long run to the price of fertilizer, marginal cost, average total cost, the quantity supplied by each firm, and the total quantity supplied to the market

3. Profit maximization using total cost and total revenue curves Suppose Raphael runs a small business that manufactures shirts. Assume that the market for shirts is a competitive market, and the market price is $20 per shirt. The following graph shows Raphael's total cost curve. Use the blue points (circle symbol) to plot total revenue and the green points (triangle symbol) to plot profit for the first seven shirts that Raphael produces, including zero shirts. TOTAL COST AND REVENUE (Dollars) 200 175 150 125 100 75 25 0 -25 0 1 2 ♫ 3 4 5 QUANTITY (Shirts) 6 Total Cost ☐ 7 8 Total Revenue Profit ?

7. Short-run and long-run effects of a shift in demand Suppose that the chicken industry is in long-run equilibrium at a price of $5 per pound of chicken and a quantity of 350 million pounds per year. Suppose the Surgeon General issues a report saying that eating chicken is good for your health. The Surgeon General's report will cause consumers to demand chicken at every price. In the short run, firms will respond by Shift the demand curve, the supply curve, or both on the following graph to illustrate these short-run effects of the Surgeon General's report. 10 9 Supply Demand 8 7 Supply 3 Demand 2 1 70 140 210 280 350 420 490 560 630 700 QUANTITY (Millions of pounds) In the long run, some firms will respond by until PRICE (Dollars per pound) CO

3. Profit maximization using total cost and total revenue curves Suppose Yakov runs a small business that manufactures teddy bears. Assume that the market for teddy bears is a competitive market, and the market price is $25 per teddy bear. The following graph shows Yakov's total cost curve. Use the blue points (circle symbol) to plot total revenue and the green points (triangle symbol) to plot profit for teddy bears quantities zero through seven (inclusive) that Yakov produces.     Yakov's profit is maximized when he produces   teddy bears. When he does this, the marginal cost of the last teddy bear he produces is   , which is ___   than the price Yakov receives for each teddy bear he sells. The marginal cost of producing an additional teddy bear (that is, one more teddy bear than would maximize his profit) is   , which is    than the price Yakov receives for each teddy bear he sells. Therefore, Yakov's profit-maximizing quantity corresponds to the intersection of the…