Problem set 6H Perfect Competition and Monopoly
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
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
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?