The three conditions required to satisfy the equilibrium of the corn market.

Question

A farmer who sells pineapples is looking to sell his crop for $1 a pound. He knows the equilibrium price is $1.20 a pound but wants to sell his bananas below this price anyways. Using the law of supply and demand, what will happen to his profits? While he will sell more pineapples, his profits per pound will be less than the equilibrium price, meaning there is no incentive to drop the price His profits will rise because he will sell more pineapples but for a lower price His profits will fall because he will not sell very many pineapples due to other suppliers selling the same product for more, thus meaning higher quality His profits will be unaffected because the equilibrium price has no effect on the quantity he sells

Answer 1

Question

Chapter 1, Problem 8Q

To determine

The three conditions required to satisfy the equilibrium of the corn market.

Expert Solution & Answer

Trending nowThis is a popular solution!

See solution

Check out sample textbook solution

Students have asked these similar questions

A farmer who sells pineapples is looking to sell his crop for $1 a pound. He knows the equilibrium price is $1.20 a pound but wants to sell his bananas below this price anyways. Using the law of supply and demand, what will happen to his profits? While he will sell more pineapples, his profits per pound will be less than the equilibrium price, meaning there is no incentive to drop the price His profits will rise because he will sell more pineapples but for a lower price His profits will fall because he will not sell very many pineapples due to other suppliers selling the same product for more, thus meaning higher quality His profits will be unaffected because the equilibrium price has no effect on the quantity he sells

What causes the market demand for a commodity to increase (i.e., causes the market demand curve to shift up and to the right)?

Why an equilibrium is defined as a price?