Consider wheat farmers in a developing country. Farmers/farms are identical (i.e. they have the same cost curves) and wheat is a perfectly competitive industry. Using current technology, the Average Total Cost (ATC) for each firm is represented by ATC₁ in the diagram below. Now suppose that overnight there is a Green Revolution. All farmers adopt new technology (think high- yielding varieties of seeds, better fertilizer etc.) that results in the ATC cost curve labeled ATC2 in the 2209 2 of 3 Problem Set 8 Questions diagram below. Do you expect the number of wheat farms in the market to increase or decrease when the new technology is adopted? Explain your reasoning.

Consider wheat farmers in a developing country. Farmers/farms are identical (i.e. they have the same cost curves) and wheat is a perfectly competitive industry. Using current technology, the Average Total Cost (ATC) for each firm is represented by ATC₁ in the diagram below. Now suppose that overnight there is a Green Revolution. All farmers adopt new technology (think high- yielding varieties of seeds, better fertilizer etc.) that results in the ATC cost curve labeled ATC2 in the 2209 2 of 3 Problem Set 8 Questions diagram below. Do you expect the number of wheat farms in the market to increase or decrease when the new technology is adopted? Explain your reasoning.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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