A few simple economics questions concerning Microeconomics.?

Question

If there are 1,000 rutabaga farms, all perfectly competitive, an increase in the price of fertilizer used for growing rutabagas will .

1. have no effect on the total quantity of rutabagas supplied, because no farm has enough market power to raise the price

2. have no effect on the total quantity of rutabagas supplied, because each farm's supply curve is a vertical line

3. decrease the total quantity of rutabagas supplied, because each farm's supply curve shifts leftward

4. reduce the total quantity of rutabagas supplied, because each farm's supply curve is a horizontal line and will shift upward

Assuming long-run external economies exist, when demand increases in a perfectly competitive market, in the long run the average total cost curve for a typical firm .

1. shifts downward

2. shifts upward

3. stays the same

4. is no longer U-shaped

Answer 1

LOL, talk about a loaded question!  I will take a stab at even trying to understand it and say, NO effect on quantity supplied because I dont see how you could possibly calculate an price increase in fertilizer shifting supply quantity.  Consumer demand does that, not price of fertilizer.  It might cause a slight price increase to the consumer but, the link to quantity supplied iand fertilizer price is not there to my poor uneducated self.   For the second part, that does seem to have a basis in the real world it would seem logical "the cost curve for a firm" should shift downward if demand goes up if the supplier can meet the increased demand because you can assume an increase in sales volume, I think.  Anyhooo... This all probably came from a text book written by the same morons who are telling us price speculation in oil futures is good for us.  That link is a little fuzzy to me as well.  Go figure....

Answer 2

3 and 3.

The price of rutabaga farming goes up, so, since firms will produce until marginal gain and marginal cost are equal, higher marginal cost will hit marginal gain at an earlier point.

Think of it this way.  If I have to spend $3 more on fertilizer for that last pound of rutabagas, which will fetch me $4 at the market, I'll do it.  If, suddenly, costs go to $5, I won't, as it will cost me more than it's worth.

As for the second question, demand doesn't shift the total cost curve.  That's supply.  A shift in demand only means supply and demand hit at a different point on the same supply  curve.