Ii show on your graph in part a the effect of the

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Unformatted text preview: 2 and QM2, respectively. (ii) Show on your graph in part (a) the effect of the increase in demand for ethanol on Farmer Roy’s quantity of corn in the short run, labeling the quantity as QF2. (iii) How does the average total cost for Farmer Roy at QF2 compare with PM2? (d) Corn is also used as an input in the production of cereal. What is the effect of the increased demand for ethanol on the equilibrium price and quantity in the cereal market in the short run? Explain. © 2010 The College Board. Visit the College Board on the Web: www.collegeboard.com. GO ON TO THE NEXT PAGE. -2- 2010 AP® MICROECONOMICS FREE-RESPONSE QUESTIONS 2. The John Lamb Company, a profit-maximizing firm producing widgets, is in a perfectly competitive widget market. Assume John Lamb employs a fixed number of employees and rents a machine for a variable number of hours from a perfectly competitive market. (a) Using correctly labeled side-by-side graphs of the factor market for machines and the John Lamb Company,...
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This note was uploaded on 02/03/2014 for the course ECONOMIC 112 taught by Professor Van le during the Fall '12 term at American Internation College.

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