1 Farmer Brown grows peaches in Georgia. Suppose the market for peaches is perfe
ID: 1107333 • Letter: 1
Question
1
Farmer Brown grows peaches in Georgia. Suppose the market for peaches is perfectly competitive and that the market price for a box of peaches is $74 per box. Farmer Brown's marginal cost of production is illustrated in the table Market Price (per box) $74 74 74 74 74 74 74. Boxes of Peaches Marginal Cost (MC) 2 4 6 12.00 6.00 18.00 36.00 72.00 108.00 What price will farmer Brown charge when maximizing profit? Farmer Brown will charge a price of $per box of peaches. (Enter your response as an integer.) What is farmer Brown's profit-maximizing level of output? Farmer Brown maximizes profit when producingboxes of peaches. (Enter your response as an integer.)Explanation / Answer
Answer
The farmer produces at MC=P
the market is perfectly competitive where the farmer is price taker so he will charge P=$74.
The quantity at MC=P is 5 units
the rule is MC=P but if it is not fulfilled then we take in to account the closest MC lower than P.
which is at Q=5
the farmer produces Q=5 boxes.
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