It’s Cinco de Mayo, And Avocado Prices Are Soaring

Bad news for guacamole lovers, especially on Cinco de Mayo—avocado prices are through the roof! Why? Less rain in the growing region, and consumption in the US has more than doubled over the last decade.—CNN Business

Answer the following questions to check your understanding of the story.

1) In what type of market do avocado farmers compete?

Avocado farmers compete in ______________.

a) an oligopoly

b) a monopoly

c) a monopolistically competitive market

d) a perfectly competitive market

2) What is the effect of rising avocado prices on an individual avocado farmer?

As avocado prices rise, an individual avocado farmer ______________.

a) increases production to set marginal cost equal to marginal revenue, and maximizes profit

b) produces fewer avocadoes, but makes the same profit

c) produces the same quantity, but makes more profit because the price rises

d) maximizes profit by producing any quantity where marginal revenue exceeds marginal cost

It’s Cinco de Mayo, And Avocado Prices Are Soaring

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