For Red Delicious apple farmers in Washington, 2001 was a terrible year (Linda A

Question

For Red Delicious apple farmers in Washington, 2001 was a terrible year (Linda Ashton, "Bumper Crop a Bummer for Struggling Apple Farmers," San Francisco Chronicle, January 9, 2001: C7). The average price for Red Delicious was $10.61 per box, well below the shutdown level of $13.23. Many farmers did not pick the apples off their trees. Other farmers bulldozed their trees, getting out of the Red Delicious business for good, taking 25,000 acres out of production Why did some farms choose not to pick apples, and others to bulldoze their trees? ( A. Optimistic farms expected the price to rise above the shutdown level in the short-run, while other more pessimistic farms exited the industry because O B. Optimistic farms expected the price to rise above the shutdown level in the short-run, while other more pessimistic farms exited the industry because they expected the price to stay below the shutdown level in the short-run they expected the price to stay below the shutdown level in the long-run C. For some farms, the price was below average variable cost, so these high cost farms exited the industry 0 D. For some farms, the price was below average total cost, so these high cost farms exited the industry

Explanation / Answer

Option B is correct

Optimistic farms expected the price to rise above the shutdown level in the short-run, while other more pessimistic farms exited the industry because they expected the price to stay below the shutdown level in the long run.

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