Question

Suppose an avocado farm has​ cost: C​ = 0.002q cubed ​+ 22q​ + 750, ​(where q is measured in​ bushels) and the rental cost of land is zero so the average cost curve includes only the​ farm's costs of​ labor, capital,​ materials, and energylong dashnot land. Marginal cost​ is: MC​ = 0.006q2​ + 22. This cost structure is representative of all firms in this industry. The market price per bushel of avocados is ​$38. The​ firm's profit maximizing output ​(rounded to one decimal​ place) is A. 20.0 units. B. 79.6 units. C. 51.6 units. D. 89.4 units. In the​ long-run, we would expect the market price of avocados​ to: A. decrease. B. remain unchanged. C. increase. D. equal zero.

Answer 1

Answer:

The​ firm's profit maximizing output is 51.6 units. The right answer is C

In the​ long-run, we would expect the market price of avocados​ to equal zero. The right answer is D

Explanation:

In order to Calculate The​ firm's profit maximizing output we would have to use the following formula:

MC = Price

Therefore, 0.006q∧2 + 22 = 38

0.006q∧2 = 38 - 22

0.006q∧2 = 16

q∧2 = 16/0.006

q∧2 = 2666.66

q = 51.6

The​ firm's profit maximizing output is 51.6 units.

A perfectly competitive firm earns zero economic profit in the long-runso, In the​ long-run, we would expect the market price of avocados​ to equal zero,