Big drops in prices for crops make it tough down on the farm Corn, soybean, and wheat prices have fallen roughly 50 percent from the historic highs of earlier this year. With better-than-expected crop yields, world grain production will rise nearly 5 percent this year. Grain prices have also become more closely tied to oil prices because of the growing corn-based ethanol industry. ... 8- 7- Source: USA Today, October 23, 2008 6- 5- Price and cost (dollars per bushel) MC ATC Grain prices fell in 2008 because A. the demand for grain decreased B. the supply of grain increased The graph shows the marginal cost, average total cost, and marginal revenue curves for a farmer. Draw a point to show the quantity produced when the price is $4 a bushel. Label it 1. Suppose the price falls to $2 a bushel. Draw the new marginal revenue curve. Label it MR₁. Draw a point to show the quantity produced when the price is $2 a bushel. Label it 2. Draw a shape that represents either the economic profit or economic loss when the price is $2 a bushel. Label it. 4- MRO 3- 2- 1. 0 10 20 30 40 50 60 70 Quantity of grain (thousands of bushels per year) 80 >>> Draw only the objects specified in the question.

ECON MACRO
5th Edition
ISBN:9781337000529
Author:William A. McEachern
Publisher:William A. McEachern
Chapter4: Demand, Supply, And Markets
Section: Chapter Questions
Problem 6.12P
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Big drops in prices for crops make it tough down on the farm
Corn, soybean, and wheat prices have fallen roughly 50 percent from the historic highs of
earlier this year. With better-than-expected crop yields, world grain production will rise
nearly 5 percent this year. Grain prices have also become more closely tied to oil prices
because of the growing corn-based ethanol industry.
...
8-
7-
Source: USA Today, October 23, 2008
6-
5-
Price and cost (dollars per bushel)
MC
ATC
Grain prices fell in 2008 because
A. the demand for grain decreased
B. the supply of grain increased
The graph shows the marginal cost, average total cost, and marginal revenue curves for a
farmer.
Draw a point to show the quantity produced when the price is $4 a bushel. Label it 1.
Suppose the price falls to $2 a bushel. Draw the new marginal revenue curve. Label it MR₁.
Draw a point to show the quantity produced when the price is $2 a bushel. Label it 2.
Draw a shape that represents either the economic profit or economic loss when the price is
$2 a bushel. Label it.
4-
MRO
3-
2-
1.
0
10 20
30 40
50 60
70
Quantity of grain (thousands of bushels per year)
80
>>> Draw only the objects specified in the question.
Transcribed Image Text:Big drops in prices for crops make it tough down on the farm Corn, soybean, and wheat prices have fallen roughly 50 percent from the historic highs of earlier this year. With better-than-expected crop yields, world grain production will rise nearly 5 percent this year. Grain prices have also become more closely tied to oil prices because of the growing corn-based ethanol industry. ... 8- 7- Source: USA Today, October 23, 2008 6- 5- Price and cost (dollars per bushel) MC ATC Grain prices fell in 2008 because A. the demand for grain decreased B. the supply of grain increased The graph shows the marginal cost, average total cost, and marginal revenue curves for a farmer. Draw a point to show the quantity produced when the price is $4 a bushel. Label it 1. Suppose the price falls to $2 a bushel. Draw the new marginal revenue curve. Label it MR₁. Draw a point to show the quantity produced when the price is $2 a bushel. Label it 2. Draw a shape that represents either the economic profit or economic loss when the price is $2 a bushel. Label it. 4- MRO 3- 2- 1. 0 10 20 30 40 50 60 70 Quantity of grain (thousands of bushels per year) 80 >>> Draw only the objects specified in the question.
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