Problem set 6H Perfect Competition and Monopoly Part 1 Perfect competition 10 points: The chart below depicts the current perfectly competitive…

Problem set 6H Perfect Competition and Monopoly  

Part 1

Perfect competition 10 points:

The chart below depicts the current perfectly competitive market for wheat. The price is per bushel (bu) and the quantities are in millions of bushels.

PriceMarket demandMarket Supply

$1800100

$2750225

$3667300

$4600420

$5540475

$6525525

$7480600

A)Draw the market demand curve and supply curve.

B)What is the equilibrium price of wheat in the market?  

C)How much wheat will be produced at equilibrium in this market? 

The chart below depicts the typical cost data for an individual wheat farmer.

QuantityTotal costMarginal cost

Average total cost

MRTR

Profit

0$10

10$90

20$150

30$190

40$225

50$285

60$365

70$465

80$585

D)What price will this individual farmer charge for a bushel of wheat? 

E)DRAW the following: ATC curve, demand curve, Marginal cost curve

F)What output level will this farmer produce to maximize his profits

G)How much profit will the farmer earn?