Prices in perfect competition
Wheat is produced under perfectly competitive conditions. Individual wheat farmers have U- shaped,long run average cost curves that meet the marginal cost curves when 800 bushels are produced and the marginal cost at that output level is $4 per bushel.
If the market demand for wheat is given by Q = 2 400 000 – 200 000p, what would be the price of wheat in the long run? How much total wheat will be demanded? How many wheat farmers will there be? Graph your results.