smiling cow dairy can sell all the milk it wants for $4 agallon, and it can rent
ID: 1234039 • Letter: S
Question
smiling cow dairy can sell all the milk it wants for $4 agallon, and it can rent all the robots it wants to milk the cows ata capital rental price of $100 a day . it faces the followingproduction scedule : Number ofRobots Total Product 0 0 gallons 1 50 2 85 3 115 4 140 5 150 6 155 in what kind of market structure does the firm sell its output? how can you tell? smiling cow dairy can sell all the milk it wants for $4 agallon, and it can rent all the robots it wants to milk the cows ata capital rental price of $100 a day . it faces the followingproduction scedule : Number ofRobots Total Product 0 0 gallons 1 50 2 85 3 115 4 140 5 150 6 155 in what kind of market structure does the firm sell its output? how can you tell?Explanation / Answer
The key to figuring out the market structure is that the problemstates that the firm can sell all the milk it can produce and thatit receives $4/gallon regardless of quantity produced (i.e., it isa price taker). Also, it states that the robot market (i.e.,a factor of production) is not limited and that unit price is not afunction of quantity of that factor demanded. Finally, thefirm is producing a homogeneous product (milk). All of theseimply that the firm is operating in a perfectly competitivemarket.
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