the run up in grain prices of the past 6 months has now caused an increase in the price of farmland. Since farmland is one of the major inputs in production of corn, the higher price for land will increase every farmer’s cost. Even if the farmer already owns land they previously purchased at lower prices, they have to recognize that the new higher price of land is their opportunity cost: they could just sell the land and receive the new higher price of land. show shifts in any of the cost curves, reflecting the higher cost of land (keeping in mind that this higher cost is independent of how much or how little corn is actually produced) and labeling the changed cost curves with a subscript 1. On the graph with $ on the vertical axis and individual firm output q on the horizontal axis, draw the P1 . What is the new profit maximizing output q1 for this typical firm? Graphically depict the size of profits or losses (negative profits) at the new price P1. Is the firm making positive or negative profits?

the run up in grain prices of the past 6 months has now caused an increase in the price of farmland. Since farmland is one of the major inputs in production of corn, the higher price for land will increase every farmer’s cost. Even if the farmer already owns land they previously purchased at lower prices, they have to recognize that the new higher price of land is their opportunity cost: they could just sell the land and receive the new higher price of land. show shifts in any of the cost curves, reflecting the higher cost of land (keeping in mind that this higher cost is independent of how much or how little corn is actually produced) and labeling the changed cost curves with a subscript 1. On the graph with $ on the vertical axis and individual firm output q on the horizontal axis, draw the P1 . What is the new profit maximizing output q1 for this typical firm? Graphically depict the size of profits or losses (negative profits) at the new price P1. Is the firm making positive or negative profits?

Microeconomics A Contemporary Intro

10th Edition

ISBN:9781285635101

Author:MCEACHERN

Publisher:MCEACHERN

Chapter11: Resource Markets

Section: Chapter Questions

Problem 4QFR

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