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Wheat is produced in a perfectly competitive market. Market demand for wheat decreases. This will cause...

Wheat is produced in a perfectly competitive market. Market demand for wheat decreases. This will cause the individual wheat farmer's marginal revenue to ________ and their profit maximizing level of output to ________.

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Answer #1

decrease, decrease

When market demand for wheat decreases, market demand curve shifts to the left. As a result, market price of wheat falls.Firms have to accept market price as given so their Marginal revenue( MR=P) decreases .Market equilibrium quantity also falls which leads to a decrease in the profit maximizing level of output for each firm.

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