a) Start with a model of the situation before the crisis in Ukraine. Draw a model of a representative individual firm in the market for wheat, i.e. an Australian wheat farmer who is a price-taker in the global market for wheat, in long-run equilibrium. Comment on the assumed market structure. Show and explain the amount of wheat the farmer will produce to the market, and explain revenue, costs and profits. b) Now consider the short-run effects of the conflict in Ukraine from the perspective of the Australian wheat farmer. We will do this in two sequences, in the interests of clarity. i. First, consider the increase in the world price. Show how this affects quantity produced, costs, revenue and profit for the farmer. ii. Second, consider the increase in the price of fertiliser. Show how this now affects the quantity produced, costs, revenue and profit for the farmer. c) If the world price of wheat, and the price of fertiliser, remains high into the future, what would be the long-run effects on the Australian wheat market and for the individual Australian wheat farmer?

a) Start with a model of the situation before the crisis in Ukraine. Draw a model of a representative individual firm in the market for wheat, i.e. an Australian wheat farmer who is a price-taker in the global market for wheat, in long-run equilibrium. Comment on the assumed market structure. Show and explain the amount of wheat the farmer will produce to the market, and explain revenue, costs and profits. b) Now consider the short-run effects of the conflict in Ukraine from the perspective of the Australian wheat farmer. We will do this in two sequences, in the interests of clarity. i. First, consider the increase in the world price. Show how this affects quantity produced, costs, revenue and profit for the farmer. ii. Second, consider the increase in the price of fertiliser. Show how this now affects the quantity produced, costs, revenue and profit for the farmer. c) If the world price of wheat, and the price of fertiliser, remains high into the future, what would be the long-run effects on the Australian wheat market and for the individual Australian wheat farmer?

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter22: Perfect Competition

Section: Chapter Questions

Problem 4QP

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3 a) Start with a model of the situation before the crisis in Ukraine. Draw a model of a representative individual firm in the market for wheat, i.e. an Australian wheat farmer who is a price-taker in the global market for wheat, in long-run equilibrium. Comment on the assumed market structure. Show and explain the amount of wheat the farmer will produce to the market, and explain revenue, costs and profits.
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Draw a model of a representative individual firm in the market for wheat, i.e. an Australian wheat farmer who is a price-taker in the global market for wheat, in long-run equilibrium. Comment on the assumed market structure. Show and explain the amount of wheat the farmer will produce to the market, and explain revenue, costs and profits. (please explain in a paragraph length for like)
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