Problem: I am having trouble finding the cost function as it is needed to calculate profit (revenue my cost). Also can you assist with the others, please.
The short-run supply curve for an orange producer in Florida is P = .001Q, where Q is bushels of oranges produced in a year. The market price of a bushel of oranges is $20 per bushel.
Question 1: What is the profit maximizing bushels of oranges this producer supplies each year?
Question 2: What is the producer surplus (net-operating profit) at this optimized output level?
Question 3: Suppose the farmer faced a land rental cost of $150,000 per year, and miscellaneous other fixed costs of $50,00 per year. What would be the producers total profits at the production point established in b?
Question 4: Suppose there is a biotechnology breakthrough that allows oranges to be grown in colder weather, changing the farmers supply curve to: P=.00075Q. What is the optimized output level now?
Question 5: What is the producer surplus with the new supply curve?
Question 6: What is the level of total profit with the new supply curve, at the optimized output level determined in (d), and with fixed costs as before (totaling $200,000)?