Catfish farming is a perfectly competitive industry, and all catfish farms have the same cost curves. The market price is $25 a fish. To maximize profit, each farm produces 200 fish a week. Average total cost is $20 a fish, and average variable cost is $15 a fish. Minimum average variable cost is $12 a fish.
If the price falls to $20 a fish, will a catfish farm continue to produce 200 fish a week? Explain why or why not.
If the price falls to $12 a fish, what will the catfish farmer do?
2007-03-17
10:52:59
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3 answers
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asked by
its_all_about_lady_jay
1