Market Structure

Grading Rubric: For full-credit, clearly write out each step of your calculations in sequential order and clearly mark your final answers. These questions have multiple parts (which also might include directions to illustrate changes on the graphs), so be sure to answer each. Partial-credit may be given, but only if all calculations are clearly shown.Submission Instructions: Completed exercises must be submitted via Course Den Assignment Drop Box by established deadline. Completed work should be scanned and submitted as a PDF. (If this is not possible, then submit a typed document (saved as word doc or pdf) along with photos of any graphs or math calculations that cannot be typed into the document._____________________________________________________________________________________________________________________________________Unit 7 Assignment Part I: A farmer can sell as many bushels of apples as she wants at a Price of $6, but if she increases price at all, her quantity sold drops to zero.1. How do you know the farmer is in a Perfectly Competitive market?2. Draw a graph of the marginal revenue curve for the farmer3. Suppose the farmer is currently making positive profits.a. Is the farmer in the short-run or long-run?b. Will firms enter or exit this market?Part II- Now suppose that the farmer is making a loss. The MR=MC at a price of $6, and the quantity produced at this point is 10. Fixed costs are $25, and the average variable cost for 10 units is $4.50.4. What is the amount of the loss? (show calculations)5. Should the farmer operate in the short-run? Explain.6. Should the farmer operate in the long-run? Explain.

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