(Figure: Cost Curves for Corn Producers) Use Figure: Cost Curves for Corn Producers.The market for corn is perfectly competitive.If the price of a bushel of corn is $4,in the short run the farmer will produce ___ bushels of corn and earn an economic _ equal to ___.

A) 0;loss;average fixed costs
B) 0;loss;total fixed costs
C) 3;loss;$30 per bushel
D) 3;profit;$20 per bushel

Question

(Figure: Cost Curves for Corn Producers) Use Figure: Cost Curves for Corn Producers.The market for corn is perfectly competitive.If the price of a bushel of corn is $4,in the short run the farmer will produce _____ bushels of corn and earn an economic _____ equal to _____.

A) 0;loss;average fixed costs
B) 0;loss;total fixed costs
C) 3;loss;$30 per bushel
D) 3;profit;$20 per bushel

Elizabeth Flores · Accepted Answer

Final Answer : B, Explanation :  DIn a perfectly competitive market, producers will continue to produce as long as the price covers the average variable costs to minimize losses or achieve profits. If the price is $4, the farmer will produce where the marginal cost equals the price, which typically would not result in producing 0 bushels if the price is above the shutdown point. Therefore, the farmer will produce a certain number of bushels (not specified in the choices provided, but the logic implies production occurs). The economic loss in the short run would be equal to the total fixed costs because variable costs are covered by the market price. Additionally, if the price allows for a profit over the average total cost, the farmer could earn an economic profit, but without specific figures or a graph, we deduce the scenario involves covering fixed costs and potentially making a profit if the price exceeds average total costs.

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