Unit 4 Assignment Part I: A farmer can sell as many bushels of apples as she wants at a Price of $6, but if she increases price at all, her quantity sold drops to zero. 1. How do you know the farmer is in a Perfectly Competitive market? 2. Draw a graph of the marginal revenue curve for the farmer. 3. Suppose the farmer is currently making positive profits. a. Is the farmer in the short-run or long-run? b. Will firms enter or exit this market? Part II- Now suppose that the farmer is making a loss. The MR=MC at a price of $6, and the quantity produced at this point is 10. Fixed costs are $25, and the average variable cost for 10 units is $4.50. 4. What is the amount of the loss? (show calculations) 5. Should the farmer operate in the short-run? Explain. 6. Should the farmer operate in the long-run? Explain