Answered step by step
Verified Expert Solution
Question
1 Approved Answer
We zoom in on the individual firm in the Australian wheat market, to consider production, costs, and profits. Specifically: Start with a model of the
We zoom in on the individual firm in the Australian wheat market, to consider production, costs, and profits. Specifically:
- Start with a model of the situation before the crisis in Ukraine. Draw a model of a representative individual firm in the market for wheat, i.e. an Australian wheat farmer who is a price-taker in the global market for wheat, in long-run equilibrium. Comment on the assumed market structure. Show and explain the amount of wheat the farmer will produce to the market, and explain revenue, costs and profits.
- Now consider the short-run effects of the conflict in Ukraine from the perspective of the Australian wheatfarmer.Wewilldothisintwosequences,intheinterests ofclarity.
- First,considertheincreaseintheworld price.Showhowthisaffects quantityproduced,costs,
revenue and profit for the farmer.
- Second,considertheincreaseinthepriceoffertiliser.Showhowthisnowaffects thequantity produced, costs, revenue and profit for thefarmer.
Iftheworldpriceofwheat,andthepriceoffertiliser,remains highintothefuture,whatwouldbethe long-runeffectsontheAustralianwheatmarketandfortheindividualAustralianwheatfarmer
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started