Question and Exercise $13-16($algo$)$

A farmer is producing where $MC=MR.$ Assume that half of the cost of producing wheat is the rental cost of land $($ a fixed cost$)$ and half is the cost of labor and machines $($a variable cost$).$ If the average total cost of producing wheat is $$26$ and the price of wheat is $$10,$ what would you advise the farmer to do$?$

In the short run, the farmer should stll grow wheat because by producing he will lose $$16$ per unit, but if he did not produce he would lose $$13$ per unit. In the long run, the farmer will go out of business.

The farmer should increase the price at which he sells wheat to $$26.$

The farmer should reduce output so that average total costs would decline.

$$ In the short run, the farmer should shut down because he is making a net loss. By producing he will lose $$16$ per unit, but if he did not produce he would simply have zero profit.