Asked by Jackson Caleb on Jun 28, 2024
Verified
(Table: Lilly's Apple Orchard) Use Table: Lilly's Apple Orchard.Lilly is the price-taking owner of an apple orchard;the orchard's variable costs are given in the table.Her orchard has fixed costs of $30.If the price of a bushel of apples is $85,we would expect total industry output to _____ and Lilly's output to _____ in the long run.
A) rise;rise
B) fall;fall
C) fall;rise
D) rise;fall
Variable Costs
Costs that vary directly with the level of production, such as materials and labor.
Long Run
A period of time in economics during which all factors of production and costs are variable.
Apple Orchard
An agricultural area dedicated to the cultivation of apple trees for the purpose of producing apples.
- Examine the effects of shifts in market demand on prices and production in both the short-term and long-term periods.
- Master the understanding of the dynamics between economic profits, average total costs, and market prices in steering firm behavior in the prolonged timeframe.
- Predict how market dynamics will shift in reaction to cost and demand changes over both short and extended durations.
Verified Answer
ZK
Zybrea KnightJul 03, 2024
Final Answer :
D
Explanation :
If the price of a bushel of apples is $85, it is likely that more firms will enter the industry, leading to an increase in industry output. As a price-taking owner, Lilly would also increase her output in the long run to maximize profits.
Learning Objectives
- Examine the effects of shifts in market demand on prices and production in both the short-term and long-term periods.
- Master the understanding of the dynamics between economic profits, average total costs, and market prices in steering firm behavior in the prolonged timeframe.
- Predict how market dynamics will shift in reaction to cost and demand changes over both short and extended durations.
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