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Homework Help (a problem of competitive market, marginal cost, price)?
A farmer who studied economics said, "Under a competitive market, the price of each apple must be the same as the marginal cost for each apple. Thus, there is no difference between the price and marginal cost, and the amount I can receive is exactly my cost of production. Thus, a competitive market is not good for farmers." Do you agree? Explain your answer.
THX!
2 Answers
- ChrisLv 710 years agoFavorite Answer
Disagree. Break even (which this is) already includes the farmers labor and cost of his capital. So farmers will earn an accounting profit when economists say they are breaking even.
- Anonymous10 years ago
Well kind of agree. Because in a competitive market everything is competing. So if the cost of apple is high and the other seller's is trying to ruin your business they will try to reduce the price of their selling price and attract more customer to themselves and therefore no profit is made and sometimes it might also get ugly if the customers are not buying it. But if the presence of apple in the country is small or not so large it will goes vice versa.