Question

The market for fertilizer is perfectly competitive. Firms in the market are producing output but are currently making economic losses. Which of the following statements is true about the price of fertilizer? Check all that apply. The price of fertilizer must be less than marginal cost. The price of fertilizer must be less than average total cost. The price of fertilizer must be equal to average variable cost. The following graphs show the cost curves faced by a typical firm, the demand for fertilizer, and possible price and supply curves. Firm Price and Costs Quantity MC ATC AVC P 1 P 2 Market Price Quantity Demand S 1 S 2 P 1 P 2 If firms in the market are producing output but are currently making economic losses, illustrates the present situation for the typical firm in the market, and indicates the corresponding supply curve. Assuming there is no change in either demand or the firm's cost curves, which of the following statements is true about what will happen in the long run? Check all that apply. Marginal cost will increase. The price of fertilizer will decrease. The total quantity supplied to the market will increase. Average total cost will increase. The quantity supplied by each firm will increase. Grade It Now Save & Continue Continue without saving

Answer 1

I am not sure what are you asking please explain more

Answer 2

Answer:

Given that the market for fertilizer is perfectly competitive. Since the firms in the market are making economic losses the price of the fertilizer must be less than the average total cost.

Thus, the correct answer is:

• The price of fertilizer must be less than average total cost)

Given graph shows the cost curves faced by a typical firm, demand for fertilizer and possible price and supply curve.

If the firms in the market are producing output but are making economic losses then point PS illustrates the situation for a typical firm in the market, and S2 indicates the corresponding supply curve.

This is because at point P2 the price is greater than the average variable cost, less than the average total cost and equal to marginal cost.

Assuming that there is no change in demand or firm's cost curves the following will happen in the long run:

Thus the correct answer is:

• The price of fertilizer will increase.  
• Average total cost will decrease.