AGEC 220 MT2 - Name_Seat No_AGEC 220 Balagtas AGEC 220 Marketing Farm Products MIDTERM 2 1 Do not open the exam until I tell you to begin 2 You

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Name___________________________________Seat No.________ AGEC 220, Balagtas AGEC 220: Marketing Farm Products MIDTERM 2 1. Do not open the exam until I tell you to begin. 2. You only need pens and/or pencils to write the exam. No calculators needed or allowed. 3. Carefully read each question. 4. There are 4 questions, each with multiple parts. A total of 50 points are possible. 5. Good luck.
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Name_________________________________Seat No.______ AGEC 220, Balagtas 1. The picture below depicts the California market for fluid milk. D is total milk demand, and MC is marginal cost. (a) Suppose the industry is competitive and MC is the industry’s marginal cost. Indicate in the diagram the equilibrium price (P c ) and quantity (Q c ). (1 point) (b) Now suppose instead that California milk producers collude to act as a monopoly seller (MC is the monopoly’s marginal cost). Indicate in the diagram the equilibrium price (P m ) and quantity (Q m ). (3 points) (c) Carefully explain how market power by California milk producers affects consumer surplus, producer surplus, and total economic surplus. (3 points) (d) Suppose that California milk producers could identify two types of consumers:
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This note was uploaded on 09/23/2009 for the course AGEC 220 taught by Professor Staff during the Spring '08 term at Purdue University-West Lafayette.

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AGEC 220 MT2 - Name_Seat No_AGEC 220 Balagtas AGEC 220 Marketing Farm Products MIDTERM 2 1 Do not open the exam until I tell you to begin 2 You

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