Question: The following table presents cost and revenue information for Ed’s Port Vineyard in a day of producing and selling bottles of wine. The market for wine is competitive .

a. Fill in the blanks in the chart above.

b. What is the competitive equilibrium (Q and P)? Explain how you got your answer.

c. Why would Ed never produce where his marginal cost is 200?

d. What should Ed do if he is producing where his total cost is 385? Why?

Now suppose Ed, instead of owning a vineyard and growing grapes, could have owned a grove of orange trees and earned $125 a day from producing and selling orange juice.

e. What is Ed’s accounting profit on owning the vineyard per day when producing 8 bottles of wine a day per day (show your work)?

f. What is Ed’s economic profit on owning a vineyard when producing 8 bottles of wine a day per day (show your work)?

g. Now suppose Ed, and only Ed, left the wine market. What would happen to the price of a bottle of wine? Why?