The market for fertilizer is perfectly competitive. Firms in the market are prod
ID: 1232057 • Letter: T
Question
The market for fertilizer is perfectly competitive. Firms in the market are producing output, but they are currently making economic losses.1. The price of fertilizer is ( A:greater than - B:less than - C:equal to) the average total cost of producing fertilizer.
2. The price of fertilizer is ( A:greater than - B:less than - C:equal to) the average variable cost of producing fertilizer.
3. The price of fertilizer is ( A:greater than - B:less than - C:equal to) the marginal cost of producing fertilizer.
To answer the remaining questions, assume that there is no change in demand or the firms' cost curves.
4. In the long run, the price of fertilizer will ( A:increase - B:decrease - C:remain the same).
5. In the long run, marginal cost will ( A:increase - B:decrease - C:remain the same) .
6. In the long run, average total cost will ( A:increase - B:decrease - C:remain the same) .
7. In the long run, the quantity of fertilizer supplied by each firm will ( A:increase - B:decrease - C:remain the same) .
8. In the long run, the total quantity of fertilizer supplied to the market will ( A:increase - B:decrease - C:remain the same) .
Explanation / Answer
1. The price of fertilizer is ( C:equal to) the average total cost of producing fertilizer. 2. The price of fertilizer is ( A:greater than -) the average variable cost of producing fertilizer. 3. The price of fertilizer is ( A:greater than - ) the marginal cost of producing fertilizer. To answer the remaining questions, assume that there is no change in demand or the firms' cost curves. 4. In the long run, the price of fertilizer will ( A:increase - 5. In the long run, marginal cost will ( B:decrease - 6. In the long run, average total cost will ( - B:decrease - . 7. In the long run, the quantity of fertilizer supplied by each firm will B:decrease - . 8. In the long run, the total quantity of fertilizer supplied to the market will ( A:increase - .
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.