Price elasticity of demand and Perfect Competition

The market for organic tomato is competitive. Table 1 below presents the price and demand schedule for tomato in the market.

Price elasticity of demand and Perfect Competition

The market for organic tomato is competitive. Table 1 below presents the price and demand schedule for tomato in the market.

Table 1. Price and demand for organic tomatoes

Price of organic tomato (per 100g)	Quantity demanded
$6	2000
$7	1600
$8	1000
$9	700
$10	420
$11	100

Each organic tomato farmer in the market has a cost schedule which is shown in Table 2 below.

Table 2. Quantity of tomatoes and marginal cost

Quantity of organic tomatoes	Marginal cost
0	$0
10	$2
20	$4
30	$6
40	$8
50	$12

Assume the fixed cost is $140.

Suppose you, as a business consultant, predicted that the price of organic tomato will drop from $10 to $9 in the long-run. Based on your answers in Question 2, should the farmer stay in the business?

Fill in the blanks.

1. At the market price $9, the farmer's profit is $ [ Select ] .

2. The farmer should [ Select ] in the business since the market price is [ Select ] the average total cost.