A combination of high crude oil prices and government subsidies for ethanol have

Question

A combination of high crude oil prices and government subsidies for ethanol have led to a sharp increase in the demand for corn in recent years. How will this increase in demand for corn influence (a) the price of corn; (b) the quantity of corn supplied, (c) the COST of producing soybeans and wheat, crops that are often produced on land suitable for production of corn, (d) the price of cereals, tortillas, and other products produced from corn; and (e) the price of beef, chicken, and pork, meats produced from animals that are generally fed large quantities of corn? Explain each of your answers. The accompanying table presents the expected cost and revenue data for the Tucker Tomato Farm. The Tuckers produce tomatoes in a greenhouse and sell them wholesale in a price-taker market. Fill in the firm's marginal cost, average variable Cost, average total cost, and profit schedules. If the Tuckers are profit maximizers, how many tomatoes should they produce when the market price is $500 per ton? Indicate their profits. Indicate the firm's output level and maximum profit if the market price of tomatoes increases to $550 per ton. How many units would the Tucker Tomato Farm produce if the price of tomatoes fell to $450 per ton? What would be the firm's profits? Should the firm stay in business? Explain. In the accompanying table, you are given information about two firms that compete in a price-taker market. Assume that fixed costs for each firm are $20. Complete the table. What is the lowest price at which firm A will produce? How many units of output will it produce at that price? (Assume that it cannot produce fractional units.) What is the lowest price at which firm B will produce? How many units of output will it produce? How many units will firm A produce if the market price is $20? How many units will firm B produce at the $20 price? (Assume that it cannot produce fractional units.) If each firm's total fixed costs are $20 and the price of output is $20, which firm would earn a higher net profit or incur a smaller loss? How much would that net profit or loss be? *Asterisk denotes questions for which answers are given in Appendix B.

Explanation / Answer

14) when ther is increase in demand ,demand curve shift rightwards and new equillibrium will be formed.

at ne equillibrium

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