Farm Problem The Weinandt Family Farm in Wynot, NE raises livestock and grows crops. Com and soybeans are crops commonly grown in Nebraska Suppose you are helping a farm similar to the Weinandt Farm make decisions about how much com to grow this year. Because corn is an agricultural product, this market meets the requirements of a perfectly competitive market a) Using the market data provided, create a market supply and demand graph. Demand Curve $12.00 $10.00 $8.00 $6.00 $4.00 $2.00 $0.00 1,000 2,000 3,000 4,000 5,000 6,000 7,000 Quantity b) What are the market equilibrium price and quantity? Equilibrium Price : $4.00 Equilibrium Quantity = 2,400 million bushels c) Using the firm cost and quantity estimates, find FC, VC, ATC, AFC, AVC, and MC Firm q (bushels) TC FC VC ATC AFC AVC MC 0 $10,000.0 $10,000.00 $0.00 500 $10.127.50 $10.000.00 $127.50 $20.26 $20.00 $0.26 $0.26 1,000 $10.505.00 $10,000.00 $505.00 $10.51 $10.00 $0.51 $0.76 1,50 $11,132.50 $10,000.00 $1,132.50 $7.42 $6.6 $0.76 $1.26 2,000 $12,010.00 $10.000.00 $2,010.00 56.01 $5.0 $1.01 $1.76 12,50 $13.137.50 $10.000.00 $3.137.50 $5.26 $4.0 $1.26 $2.26 13,000 $14,515.00 $10.000.00 $4.515.00 $4.84 $3.33 $1.51 $2.76 3,500 $16.142.50 $10,000.00 $6.142.50 $4.61 $2.8 $1.76 $3.26 4,000 $18.020.00 $10,000.00 $8,020.00 $4.51 $2.50 $2.01 $3.76 4,500 $20.147.50 $10.000.00 $10.147.50 $4.48 $2.22 $2.26 $4.26 5.00 $22,525.00 $10,000.00 $12.525.00 $4.51 $2.00 $2.51 $4.76 5,500 $25,152.50 $10.000.00 $15.152.50 $4.57 $1.8 $2.76 $5.26 6.00 $28.030.00 $10.000.00 $18.030.00 $4.67 $1.67 $3.01 $5.7 6,50 $31,157.50 $10.000.00 $21.157.50 $4.79 $1.54 $3.26 $6.26 7,000 $34,535.00 $10.000.00 $24.535.00 $4.93 $1.4 $3.51 $6.76 17,500 $38,162.50 $10.000.00 $28.162.50 $5.09 $1.33 $3.76 $7.26 |8,000 $42,040.00 $10.000.00 $32,040.00 $5.26 $1.25 $4.01 $7.7 8.500 $46,167.50 $10.000.00 $36.167.50 $5.43 $1.18 $4.26 $8.26 9,000 $50,545.00 $10,000.00 $40.545.00 $5.62 $1.1 $4.51 $8.76 9.500 $55.172.50 $10.000.00 $45.172.50 $5.81 $1.0 $4.76 $9.26 10,000 $60,050.00 $10.000.00 $50.050.00 $6.01 $1.00 $5.01 $9.76 Graph ATC, AFC, AVC, and MC. $25.00 $20.00 $15.00 $10.00 $5.00 $0.00 2,000 4,000 6,000 8,000 10,000 12,000 Quantity 1) Based on your answers in part c, between which quantities is ATC minimized? Assume that given the opportunity, the firm would want to produce more instead of less. Quantity Quantity From To bushels e) Based on your answers in part c, between which quantities should the farm aim to produce? Quantity Quantity From To bushels f) Using the lower of the two quantities in part e, estimate TR, TC, and Profit Loss. Quantity = bushels Total Revenue (TR) = Total Cost (TC) = Profit Loss = g) Will the farm decide to grow com or leave the fields bare in the short run? In the short run, the farm will decide to h) Will farms enter this market, leave the market, or remain constant in the long run? In the long run, farms will