An apple farmer can only produce in quantities of 1, 100, 200, 300, 400 or 500 Bushels and has the following costs
Bushels Total Cost
0 $200
100 $350
200 $550
300 $800
400 $1,300
500 $2,000
1. What is the marginal cost per bushel of apples produced?
2. If the market price of a bushel of apples is $5.50, and is unaffected by the farmer's production decision, then the marginal revenue of a bushel of apples is $5.50. In that case, how many bushels of apples should the farmer produce?
If the government imposes a tax on the sellers which results in the sellers receiving $1 less per bushel sold, what amount of apples should the farmer choose to produce?