Assume that apples are produced in a perfectly competitive market. Grandeâs Orchard is a typical firm that grows and sells apples. Currently, Grande earns zero economic profit, and the market price of apples is $10 per bushel. a. Draw a correctly labeled graph showing Grandeâs demand curve, average total cost curve, and marginal cost curve, and show the profit-maximizing quantity, labeled QG.
b. Suppose an increase in the popularity of apple cider increases the demand for apples. How will the increase in the demand for apples affect Grandeâs economic profit in the short run? Explain.
c. What will happen to Grandeâs economic profit in the long run? Explain.