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-(Table: Cherry Farm)Use Table: Cherry Farm.Suppose all farms have identical cost curves,as shown in the table.How much will the industry produce in long-run equilibrium if there are 100 farms in the industry in the long run?

Question

Use the following to answer question: 
-(Table: Cherry Farm)Use Table: Cherry Farm.Suppose all farms have identical cost curves,as shown in the table.How much will the industry produce in long-run equilibrium if there are 100 farms in the industry in the long run?

Quizplus · Accepted Answer

In long-run equilibrium, firms in a perfectly competitive market produce at the minimum point of their average total cost (ATC) curve, assuming all farms have identical cost curves. Without the specific table details, the general principle is that each farm will adjust its production to where its marginal cost (MC) equals the market price, which also corresponds to the minimum ATC for efficiency and zero economic profit in the long run. If each farm produces at its most efficient point, and assuming this point is 4 pounds per farm (as might be inferred from the choices given and typical analysis), with 100 farms, the industry would produce 400 pounds in total.

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