Question

Suppose the quantity of apples supplied in your market is \(2,400 .\) If there are 60 apple producers, each with identical cost structures, how many apples does each producer supply to the market?

Short answer

Each producer supplies 40 apples.

Step-by-step solution

Understand the Problem

We need to determine how many apples each individual producer supplies when there are 60 identical producers contributing to a total market supply of 2,400 apples.

Use Division to Find Individual Supply

Since each producer has the same cost structure and thus contributes the same amount to the total supply, we can use division to find out how many apples each producer supplies. We divide the total supply of apples, 2,400, by the number of producers, 60.

Perform the Division

Calculate the division: \(\frac{2,400}{60}\). Divide 2,400 by 60 to find the number of apples each producer supplies.

Calculate the Result

Perform the calculation \(\frac{2,400}{60} = 40\). Each producer supplies 40 apples to the market.

Key concepts

Identical Cost Structures

In the context of economics, identical cost structures refer to a situation where each producer in a market incurs the same costs for producing goods or services. This implies that they have similar methods of production, access to resources, and efficiency levels. Understanding this concept is crucial when analyzing market supply because it means each producer will contribute to the supply in a uniform manner.
When businesses have identical cost structures, it simplifies the calculation of their individual contributions to the market. This scenario is common in perfectly competitive markets where no single producer can influence prices or output significantly.
A practical example is when a group of farmers uses the same seeds, equipment, and farming techniques, resulting in the same cost to grow a bushel of apples. Because these cost structures are identical, any variation in output is not due to cost differences but possibly external factors, making market analysis more straightforward.

Division in Economics

Division is a fundamental mathematical operation often used in economics to allocate or distribute resources, output, and costs evenly among different units or agents. In our exercise, division is used to determine how many apples each producer supplies.
The process involves dividing the total market supply of apples (2,400) by the number of producers (60). This mathematical operation helps to find out the contribution of an individual producer.
By performing this division, \(\frac{2,400}{60}\), we find that each producer supplies 40 apples. Thus, division acts as a critical tool in understanding and splitting market outputs when conditions, such as identical cost structures, are given.

Individual Producer Supply

Individual producer supply refers to the quantity of goods a single producer contributes to the overall market supply. In scenarios where producers have identical cost structures, as seen in our exercise, understanding individual supply becomes straightforward as they are assumed to contribute equally.
Knowing the individual producer supply is vital for businesses as it helps them gauge their market share and competitive position. It also enables economists and market analysts to make informed predictions about market behavior under different economic circumstances.
This is especially relevant in industries where producers follow set regulations or production standards, ensuring their outputs are nearly identical. The uniformity in production means that changes in market supply are likely due to the number of participants rather than individual variations in production.