According to the Department of Agriculture, net farm income in 2019 is projected to rise by more than 10 percent, to $92.5 billion in 2019, with much of the increase coming from federal aid and insurance payments to farmers. Without these payments, U.S. net farm income would have dropped by nearly 8 percent. The Trump administration paid an estimated $22.4 billion in aid to U.S. farmers in 2019 to compensate for lower prices and lost sales due to global trade disputes.
Source: P.J. Huffstutter, "U.S. farm income expected to rise in 2019, but only because of government aid," Reuters, December 2, 2019.
-Refer to the Article Summary. Assume that after the increase in U.S. farm income in 2019, farmers are not expected to receive federal aid the next year and are expected to break even in 2020. This means that at the profit-maximizing quantity in 2020

Question

According to the Department of Agriculture, net farm income in 2019 is projected to rise by more than 10 percent, to $92.5 billion in 2019, with much of the increase coming from federal aid and insurance payments to farmers. Without these payments, U.S. net farm income would have dropped by nearly 8 percent. The Trump administration paid an estimated $22.4 billion in aid to U.S. farmers in 2019 to compensate for lower prices and lost sales due to global trade disputes. 
 Source: P.J. Huffstutter, "U.S. farm income expected to rise in 2019, but only because of government aid," Reuters, December 2, 2019.
-Refer to the Article Summary. Assume that after the increase in U.S. farm income in 2019, farmers are not expected to receive federal aid the next year and are expected to break even in 2020. This means that at the profit-maximizing quantity in 2020

Quizplus · Accepted Answer

In 2020, if farmers are expected to break even, it means that their total revenue equals total costs, which implies that marginal revenue (MR) equals average total cost (ATC) at the profit-maximizing quantity.

According to the Department of Agriculture, Net Farm Income in 2019