Question

A purely competitive wheat farmer can sell any wheat he grows for $20 per bushel. His five acres of land show diminishing returns because some are better suited for wheat production than others. The first acre can produce 1,000 bushels of wheat, the second acre 900, the third 800, and so on.

Answer 1

Answer on Question #56429, Economics / Microeconomics

A purely competitive market, P = $20 per bushel. The first acre can produce 1,000 bushels of wheat, the second acre 900, the third 800, and so on.

As we can see from the table built, total revenue will increase with diminishing returns and marginal revenue will be constant with additional acre of land, because the market is perfectly competitive..