ECO100 Assign5 - James E. Pesando Economics 100 Assignment...

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James E. Pesando Economics 100 Assignment #5 The Costs of Production and Perfect Competition 1. The world market for wheat is perfectly competitive and in long-run equilibrium. Due to a change in tastes, there is a sharp increase in the world demand for wheat. (Assume , for the purpose of this question , that wheat is a constant-cost industry in the long-run ) a) In the short-run, what will happen to the price of wheat? The economic profits of a representative wheat farmer? Use appropriate diagrams to illustrate your answer. b) In the long-run , what will happen to (1) the number of wheat farmers and (2) the economic profits of a representative wheat farmer? What will be the market price of wheat? Why? 2. There are 2,000 hot dog stands operating in Toronto. Each stand has the usual U-shaped average-total-cost curve. The market demand curve for hot dogs slopes downward, and the market for hot dogs is in long-run equilibrium. a)
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ECO100 Assign5 - James E. Pesando Economics 100 Assignment...

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