1. On the left show the market for potatoes and how the competitive market price for potatoes is determined by supply and demand. 2. Now act as if you are a potato farmer in the Midwest of the United States. On the right side represent the individual firm and draw your marginal and average total cost curves, then illustrate the profit you have made during the year. [You need to draw the charts so that the firm is making a profit.]
Be precise and label your charts.
2. Assume that due to an increase in the federal minimum wage, you now must pay your employees twice as much. In what way does this impact the above charts? Are you still going to be able to realize the same profit? Please explain.