He produces 0 bushels per month to maximize his profits in the short run.
Market pricing is a strategy used to set prices in line with contemporary expenses inside the marketplace for equal or similar products or services. It offers organizations the possibility to set better charges to start with before matching market expenses to live competitive at the same time as nevertheless developing go back on investment.
As per the given data, we know that
a).
=> Optimal rule for production is P = MR = MC.
=>Here P = MC = 74.50 occurs when Q = 4000 bushels.
=>Consequently he produces 4000 bushels per month.
b).
=> Profit = (P - ATC)*Q
= (74.50 - 45.13)*4000
= 117480
c).
=> Optimal rule for production is P = MR = MC.
=>Here P = MC = 22.50 occurs when Q= 1500 bushels.
=> Consequently he produces 1500 bushels per month.
d).
=>Profit = (P - ATC)*Q
= (22.50 - 29.50)*1500
= -10500
e).
=> No production occurs at this price because of P < AVC.
=>Consequently he produces 0 bushels per month.
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