Question

The above diagram illustrates the short run cost curves for Sarah Mat, a rice farmer in Queensland. Calculate the profit or loss for Sarah Mat and, examine the key characteristics for perfect competition firm with reference to Sarah’s farm.

Answer 1

See explaination

Step-by-step explanation:

Setting P=MC, the firm will produce Q = 500 units

Profit = (40-34)*500= 3500

The firm is in short run as it will earn zero profits in the long run due to entry of new firms because of positive profits.

See attachment