There are around 1 million farmers in country B. Each farmer is a small part of the market and can produce any one of the two fruits: apples and oranges. The planting, cultivation and harvest of a fruit(apple or orange) take three months. After three months, a farmer may shift to another fruit.
There are around 4 million buyers of apples and oranges in country B who directly buys the fruits from the farmers.

a). Discuss in detail about the price that the farmers can charge for apples and oranges in this case.
b). According to an economic report, the farmers producing apples are earning a zero economic profit. What does this mean and imply in this situation?
c). Discuss the concept of production in the short-run and long-run using the given scenario.
d). Discuss the concept of fixed inputs and variable inputs using the given scenario.
e). Discuss the concept of average total cost and marginal cost using the given scenario.
f). Discuss in detail the concept of resource allocative efficiency using the given scenario.
g). Discuss the concept of productive efficiency using the given scenario. Discuss how productive efficiency may benefit country B and the farmers individually.

Answer rating: 100% (QA)

a This occurs as a result of the consumers ability to switch from one good to the other If apples and oranges are replacements for example an increase ... View the full answer