Question

14. A purely competitive wheat farmer can sell any wheat he grows for $20 per bushel. His five acres of land show diminishing returns because some are better suited for wheat production than others. The first acre can produce 1,000 bushels of wheat, the second acre 900, the third 800, and so on.

a. Fill in the table below to answer the following questions. How many bushels will each of the farmer’s five acres produce? How much revenue will each acre generate? What are the TR and MR for each acre?

Acre	That Acre Yield	That Acre’s Revenue	TR	MR

b. If the marginal cost of planting and harvesting an acre is $14,000 per acre for each of the five acres, how many acres should the farmer plant and harvest?

17. A purely competitive firm should produce in the short run if its total revenue is sufficient to cover its

total costs.

marginal costs.

total fixed costs.

total variable costs.

18.The MR = MC rule can be restated for a purely competitive seller as P = MC because

each additional unit of output adds exactly its price to total revenue.

the firm's average revenue curve is downsloping.

the firm's marginal revenue and total revenue curves will coincide.

the market demand curve is downsloping.

Answer 1

5 Acres of each farmer will produce 4000 bushels

Revenue generated by each acre is calculated in column 3 below

If Marginal Cost is $14000 then MR=MC which is equal for 4 acres of producing land hence farmer should harvest 4 acres of land

Acre	That Acre Yield	That Acre Revenue	TR	MR
1	1000	20000	20000
2	900	18000	38000	18000
3	800	16000	54000	16000
4	700	14000	68000	14000
5	600	12000	80000	12000
6	500	10000	90000	10000
7	400	8000	98000	8000

Answer for 17)

In short run both costs need to be covered hence total revenue should cover total cost option 1 is coorrect

Answer for 18

Each additional unit of production adds exectly its price to revenue hence option 1 is correct response here