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3. Consider the graph below, which depicts the cost curves of a perfectly competitive seller of potatoes. Potatoes currently sell for $3 per pound. Price

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3. Consider the graph below, which depicts the cost curves of a perfectly competitive seller of potatoes. Potatoes currently sell for $3 per pound. Price 8: cost (S/pnund) .11 '(f 53 -- " Lotmfum 5.000 moo Quantity of potatoes (a) To maximize prot, howr many pounds of potatoes should this seller produce? (1)) Suppose that the potato grower's bank increases the interest rate applicable to the grower's adjustable-rate mortgage loan. This increases the size of the potato grower's monthly mortgage payment. Which curves shift? Which do not? Why? (c) How does the change in interest rates affect the grower's decision on how many potatoes to produce? (d) What happens to the potato grower's profit as a result of the increased interest rate? (e) How does the change in interest rates affect the shape andfor position of the gmwet's short-run supply curve

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