Microeconomics Theory Assignment Fall 2020

January 17, 2021

The Weinandt Family Farm in Wynot, NE raises livestock and grows crops. Commonly grown crops in Nebraska are corn and soybeans. Suppose you are helping a farm similar to the Weinandt Farm make decisions about how much corn to grow this year. As an agricultural product, the market for corn meets the requirements of a perfectly competitive market.

a) Using the market data provided, create a market supply and demand graph.
b) What are the market equilibrium price and quantity?
c) Using the firm cost and quantity estimates, find FC, VC, ATC, AFC, AVC, and MC. Graph ATC, AFT, AVC, and MC.
d) Based on your answers in part c, between which quantities is ATC minimized?
e) Based on your answers in part c, between which quantities should the farm aim to produce?
f) Using the lower of these two quantities, estimate TR, TC, and Profit/Loss.
g) Will the farm decide to grow corn or leave the fields bare? Explain your answer.
h) Will farms enter this market, leave the market, or remain constant? Explain your answer.

Microeconomics Theory Assignment Fall 2020

Q_D (millions of bu)	Q_S (millions of bu)	Price/bu	Firm q (thousands of bu)	TC	FC	VC	ATC	AFC	AVC	MC
0	6000	10	0	10000
200	5700	9.5	0.5	10128
400	5400	9	1	10505
600	5100	8.5	1.5	11133
800	4800	8	2	12010
1000	4500	7.5	2.5	13138
1200	4200	7	3	14515
1400	3900	6.5	3.5	16143
1600	3600	6	4	18020
1800	3300	5.5	4.5	20148
2000	3000	5	5	22525
2200	2700	4.5	5.5	25153
2400	2400	4	6	28030
2600	2100	3.5	6.5	31158
2800	1800	3	7	34535
3000	1500	2.5	7.5	38163
3200	1200	2	8	42040
3400	900	1.5	8.5	46168
3600	600	1	9	50545
3800	300	0.5	9.5	55173
4000	0	0	10	60050