Essay
In the competitive market for organic corn, market demand is QD = 340 - 2P and market supply is QS = 100 + 4P, where P is the price per bushel, and Q is market output in thousands of bushels. Each individual farmer faces a marginal cost function of MC = 10 + 3q, where q is the single farmer's output level in thousands.
a. What is the equation for the demand (which is also MR) faced by the individual farmer?
b. Based on your answer to part (a), find the profit-maximizing output level for each farmer.
c. At an output level of 8 thousand bushels, explain in terms of both marginal profit and total profit why the individual farmer should expand production.
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2a. The individual competitive farm must...View Answer
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