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Food and Nutrition EconomicsFundamentals for Health Sciences$
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George C. Davis and Elena L. Serrano

Print publication date: 2016

Print ISBN-13: 9780199379118

Published to Oxford Scholarship Online: November 2017

DOI: 10.1093/oso/9780199379118.001.0001

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Profit and Supply for Farms and Firms

Profit and Supply for Farms and Firms

(p.161) 12 Profit and Supply for Farms and Firms
Food and Nutrition Economics

George C. Davis

Elena L. Serrano

Oxford University Press

Chapter 12 begins by explaining why firms exist. The chapter then presents some data on the diversity of commodity production and profitability by farm size. The analytics of profit maximization when the firm operates in a competitive environment and is a price taker are then presented. The chapter determines the rule that guides production in order to maximize profit when the firm is a price taker. This analysis leads to a derivation of the firm’s (farm’s) supply curve. The chapter also explains what factors may cause a shift in the supply curve. The chapter explains the difference then between the supply curve and the supply function for a commodity. The chapter closes by emphasizing the main point of this chapter: any consideration of growing alternative commodities must consider revenue and cost differences.

Keywords:   mixed economic system, firm, production, revenue, cost, economic profit, supply curve, supply function

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