Suppose that the market for rice is competitive. This means that the farmer will maximise profit by choosing:Group of answer choicesto produce the quantity at which average fixed cost is minimized.to sell its wheat at a price where marginal cost is equal to average total cost. the quantity at which market price is equal to the farm’s marginal cost of production.the quantity where average revenue is equal to the farm’s average variable cost.

The market for wheat consists of 500 identical firms, each with the totalcost function C(Q) = 90, 000 + 0.00001Q2 where Q is measured in bushels per year. Themarket demand curve for wheat is Q = 90, 000, 000 − 20, 000, 000P , where Q is againmeasured in bushels and P is the price per bushel. The market is perfectly competitive.(a) Obtain the average and marginal cost functions of each firm. Obtain the total cost,average cost and marginal cost when the production of a firm is Q0 = 100, 000.

How does a firm in a perfectly competitive market maximize profit in the short run? By producing where marginal cost equals average total cost By producing where price equals average total cost By producing where marginal cost equals marginal revenue By producing where price equals marginal cost

Clara produces and sells tomatoes in a perfectly competitive market. This implies that Clara’s marginal revenue generated from selling an additional unit of tomatoes is always equal toMultiple Choiceprice.average cost.variable cost.profit per unit.

The market price is determined bymultiple choice 1marginal revenue and average total cost.market demand and market supply.marginal revenue and marginal cost.b. To determine the firm's profit-maximizing output, the firm will set its marginal revenue equal tomultiple choice 2marginal cost.market price.average total cost.average variable cost.c. A firm is making an economic profit if, at the profit-maximizing output, the market price ismultiple choice 3less than average total cost.greater than average total cost.greater than average variable cost.less than average variable cost.d. If firms are earning economic profits, the market price willmultiple choice 4fall as some existing firms exit the market.fall as new firms enter the market.increase as some existing firms exit the market.increase as new firms enter the market.

A rice merchant sells two varieties of rice, A and B, the ratio of whose cost prices is 3 : 2. If he sells A at a 15% profit and B at a 10% loss, find the overall profit or loss made by the merchant by selling equal quantities of both the varieties.