Farm Fresh Inc supplies sweet peas to canneries located throughout
Farm Fresh, Inc., supplies sweet peas to canneries located throughout the Mississippi River Valley. Like many grain and commodity markets, the market for sweet peas is perfectly competitive. With $250,000 in fixed costs, the company's total and marginal costs per ton (Q) are:
TC = $250,000 + $200Q + $0.02Q2
MC = TC/Q = $200 + $0.04Q
A. Calculate the industry prices necessary to induce short-run quantities supplied by the firm of 5,000, 10,000, and 15,000 tons of sweet peas. Assume that MC > AVC at every point along the firm’s marginal cost curve and that total costs include a normal profit.
B. Calculate short-run quantities supplied by the firm at industry prices of $200, $500, and $1,000 per ton.

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