Alex Lopez & Sons, Inc. – A hydroponic farm with eight greenhouses for producing
ID: 1204100 • Letter: A
Question
Alex Lopez & Sons, Inc. – A hydroponic farm with eight greenhouses for producing tomatoes in a perfectly competitive
industry competing with other greenhouse growers and field producers in the U.S.
and Mexico. (In the short run).
Part I. Compute the values for the blank cells.
Q *
Green-
houses/
lbs. of
Tomatoes
Expected
Wholesale
Market
Price/ Per lb.
TR
MR
Per/lb.
FC
VC
TC
$ Profit or loss
AVC Per/lb.
ATC Per/lb.
MC Per/lb.
0/0
$ .80
$ 0
1/ 25,000
$. 80
15,000
$ 37,000
2/ 50,000
$ .80
25,000
3/ 75,000
$ .80
27,000
4/ 100,000
$ .80
30,000
5/ 125,000
$ .80
$ 57,000
6/ 150,000
$ .80
48,000
7/ 175,000
$ .80
66,000
8/ 200,000
$ .80
99,000
* Experience indicates that their yield is 25,000 lbs. of tomatoes per greenhouse. Therefore, for all per lb. computations, use thousands for Q
in the formulas, e.g. 25,000, 50,000, 75,000… etc. lbs. - instead of 1, 2, 3… etc. greenhouses.
Q *
Green-
houses/
lbs. of
Tomatoes
Expected
Wholesale
Market
Price/ Per lb.
TR
MR
Per/lb.
FC
VC
TC
$ Profit or loss
AVC Per/lb.
ATC Per/lb.
MC Per/lb.
0/0
$ .80
$ 0
1/ 25,000
$. 80
15,000
$ 37,000
2/ 50,000
$ .80
25,000
3/ 75,000
$ .80
27,000
4/ 100,000
$ .80
30,000
5/ 125,000
$ .80
$ 57,000
6/ 150,000
$ .80
48,000
7/ 175,000
$ .80
66,000
8/ 200,000
$ .80
99,000
Explanation / Answer
ROW 2: (WITH 25000 lbs)
TR = P*Q = 25000*0.80 = $20000
MR = TR2 - TR1 = 20000- 0 = 20000
given, TC = 37000 AND VC = 15000
and as we know, TC = FC + VC
so, FC = TC-VC = 37000 - 15000 = $22000
PROFIT = TR - TC = 20000 - 37000 = -17000 (loss)
AVC = VC/Q = 15000/25000 = 0.6
ATC = TC/Q = 37000/25000 = 1.48
and MC = TC2-TC1 = 37000 - 0 = $37000
Q P TR (=P*Q) MR (=TRN - TRN-1) FC VC TC PROFIT ( TC-TR) AVC(=VC/Q) ATC (= TC/Q) MC (=TCN - TCN-1) 0 0.80 0 0 0 0 0 0 0 25000 0.80 20000 20000 22000 15000 37000 -17000 15000/25000 = 0.6 1.48 37000 50000 0.80 40000 20000 22000 25000 47000 -7000 0.5 0.94 10000 75000 0.80 60000 20000 22000 27000 49000 11000 0.36 0.65 2000 100000 0.80 80000 20000 22000 30000 52000 28000 0.3 0.52 3000 125000 0.80 100000 20000 22000 35000 57000 43000 0.28 0.456 5000 150000 0.80 120000 20000 22000 48000 70000 50000 0.32 0.47 13000 175000 0.80 140000 20000 22000 66000 88000 52000 0.38 0.50 18000 200000 0.80 160000 20000 22000 99000 121000 39000 0.49 0.60 33000Related Questions
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