Week 10 Model Workshop: How Many Loads of Hay, and Should the Farm Stay Open?

Part 1 — The Big Picture

This week you learned how a firm behaves when the market sets its price: it takes the price as given, so each unit it sells adds exactly the price to its revenue; it makes every unit whose marginal cost is no more than the price; it reads its profit or loss as a rectangle; it stays open at a loss while the price covers average variable cost; and over time, entry and exit push the price to the lowest average total cost. In this workshop you build a small hay farm's cost table in a spreadsheet, test four market prices, decide at each one how many loads to sell and whether to open, find where the long run leaves the price, and then catch a chatbot's slips on the same farm. The habit you build, comparing the price with marginal cost for how many and with average cost for whether, carries into every firm the course studies next.

Time budget: Plan for about 90 minutes.

Part 2 — The Task

Guiding question: At each market price for hay, how many loads should the farm sell, does it earn a profit or take a loss, and should it stay open today?

Workshop data: the illustrative hay farm

Source: An illustrative farm constructed for this workshop, not real data: a small farm that sells loads of hay at the regional hay market, where it is a price taker. Its fixed cost is 120 dollars a day for its land lease and equipment, and its total cost for 0 to 6 loads a day is listed in Part 4; the four market prices to test are 60, 47, 30, and 18 dollars a load.

• Rows: 7 output levels, 0 to 6 loads a day, in the cost table (the decision table has 4 rows, one per market price)
• Columns: loads a day and total cost in dollars a day, from which marginal cost, average variable cost, and average total cost are built
• Market prices to test: 60, 47, 30, and 18 dollars a load

Part 3 — Materials & Procedure

Tools and materials

• Desmos (free) or Google Sheets (free)

Ways of working

• build-the-supply-and-demand-schedule
• shift-vs-move-along-the-curve
• compute-elasticity-by-the-midpoint-formula

Procedure

1. Open a blank Google Sheets file. Label row 1 as Loads, Total cost, Marginal cost, Average variable cost, and Average total cost in columns A to E. Type the loads 0 to 6 in A2 to A8 and the total costs 120, 145, 166, 183, 204, 235, and 288 in B2 to B8. Tool: Desmos (free) or Google Sheets (free). Check: Seven rows of loads and total cost, starting from 120 dollars at zero loads.
2. In C3 type =B3-B2 for marginal cost, in D3 type =(B3-120)/A3 for average variable cost, and in E3 type =B3/A3 for average total cost. Copy the three cells down to row 8. Tool: Desmos (free) or Google Sheets (free). Check: Marginal cost falls and then rises, and each average column dips to a lowest value and then climbs.
3. Type a market price in J1, starting with 60. In F2 type =$J$1*A2 for total revenue and in G2 type =F2-B2 for profit, then copy both down to row 8. Note the row with the largest profit. Tool: Desmos (free) or Google Sheets (free). Check: Revenue rises by the same amount for every load, and the profit column peaks at one row.
4. Change J1 to 47, then 30, then 18, and each time note the best row and its profit. Also compare that profit with the loss from closing for the day, which is the fixed cost. Tool: Desmos (free) or Google Sheets (free). Check: At the higher prices the best profit is positive or zero; at the lower prices every row shows a loss, and you compare it with closing.
5. Optional picture: open Desmos and enter the marginal-cost and average-total-cost columns as two tables of points, with loads on the x-axis and dollars per load on the y-axis, and add a flat line such as y = 60 for the price. Tool: Desmos (free) or Google Sheets (free). Check: The flat price line crosses the rising marginal-cost points, and the average-total-cost points form a bowl below or above it.
6. Fill in the Part 4 tables from your sheet, answer the analysis questions in Part 5, then do the AI-critique step in Part 6 or its equivalent route.

Fallback route

When to use it: Use this route if you cannot open Google Sheets or Desmos, or your device cannot run them.

Complete both Part 4 tables by hand with any calculator, writing each subtraction or division beside its result. Describe the picture in words instead of drawing it: what is on each axis, where the flat price line sits at each price, where the marginal-cost points cross it, and where the average-total-cost bowl bottoms out. Answer all six analysis questions, do the critique step, and submit the same items for equal credit.

This route earns the same credit as the primary route.

Part 4 — The Scaffold

Build the hay farm's cost table first; every decision in this workshop compares a price with one of these columns.

Student scaffold table 1

Loads a day	Total cost (dollars)	Marginal cost (dollars per load)	Average variable cost (dollars per load)	Average total cost (dollars per load)
0	120	none	none	none
1	145
2	166
3	183
4	204
5	235
6	288

Test each market price: choose the loads with P = MC, compute the day's profit, and decide whether to operate or shut down.

Student scaffold table 2

Market price (dollars per load)	Loads sold	Total revenue (dollars)	Total cost (dollars)	Profit or loss (dollars)	Operate or shut down
60
47
30
18

Part 5 — Analysis Questions

1. Complete the cost table. Where is average variable cost lowest, and where is average total cost lowest? Say in one plain sentence what each lowest point will decide for the farm.
2. Complete the decision table. For each price, show the comparison of price with marginal cost that picks the loads, then compute profit both as revenue minus total cost and, for 60 dollars, as price minus average total cost, times loads. Say in words what each result means for the farm.
3. At 30 dollars a load the farm takes a loss. Explain with the shutdown rule whether it should still open today, comparing its loss from operating with its loss from closing, and say which cost the farm pays either way.
4. Suppose hay sells for 60 dollars a load for a long stretch. Describe what new farms do, which market curve shifts and which way, and where the price ends up in the long run. Then say what zero economic profit at that price means for the farm's owner.
5. Name one way this classroom model differs from a real hay farm, such as costs that change with the weather or loads that cannot be split, and say how it could change one of your answers.
6. Choose one reflection option and answer it: (a) describe a business you know that stays open through a slow stretch, in words, and say which of its costs it pays even when closed; or (b) describe a product that many sellers rushed to offer after it became popular, in words, and say what that did to its price and to the first sellers' profits.

Part 6 — AI-Critique Moment

Choose one equal-credit critique route. Route A: ask an approved AI tool to critique your completed work, then check its response against your own evidence. Route B is the no-AI equivalent printed below.

Approved tools: Claude, Gemini, ChatGPT, Grok, Microsoft Copilot.

Prompt to paste:

I am studying perfect competition in an introductory microeconomics course. In an illustrative example, not real data, a small hay farm is a price taker at the regional hay market. Its fixed cost is 120 dollars a day, and its total cost is 120, 145, 166, 183, 204, 235, and 288 dollars for 0 to 6 loads of hay a day. For market prices of 60, 47, 30, and 18 dollars a load, how many loads should the farm sell, what is its profit or loss, and should it stay open or shut down for the day? Where does the price end up in the long run, and what is the farm's profit there? Then answer: when the price of hay falls from 60 to 30, does the farm's supply curve shift? When new farms enter, does market demand for hay rise? What is the price elasticity of demand the farm faces, and is it elastic or inelastic? Should the government help hay farmers when prices fall? Should the farm grow only hay because it grows hay faster than its neighbors? Is the 60-dollar profit the farm's accounting profit? What rule should a farm with no rivals use to set its price? Does hay dust from the farm impose a cost on its neighbors that the market misses? Does the price change mean demand for hay changed? Who really pays if the town taxes each load sold? Is a price limit of 40 dollars a load a price ceiling or a price floor?

Test the response for these likely failures:

• Chatbots often tell the farm to sell loads until the price equals average total cost, or call the 47-dollar average the cost of one more load.
• Chatbots often state P = MC as the rule for every firm, including a farm with no rivals.
• Chatbots often call the long-run zero profit at 47 dollars a sign that the owner earns nothing, or call the 72-dollar profit accounting profit.
• Chatbots sometimes say a fall in the hay price shifts the farm's supply curve, or that entry shifts market demand.
• Chatbots sometimes say demand for hay changed because the price changed.
• Chatbots sometimes give the flat line the farm faces a slope of zero and call that its elasticity.
• Chatbots sometimes call the farm's demand inelastic because the price does not change.
• Chatbots often add that the government should help hay farmers when prices fall, presenting a value judgment as a model result.
• Chatbots sometimes say the farm should grow only hay because it grows hay faster than its neighbors.
• Chatbots often say the farm bears a per-load tax in full because it hands the tax to the town.
• Chatbots sometimes call a 40-dollar legal maximum a price floor.
• Chatbots sometimes add a cost for hay dust on neighbors to the farm's marginal cost.

Write 3–5 sentences naming what the chatbot got right and at least two places where it slipped into one of the failures above, quoting its words and correcting each by hand against your own completed tables and Chapter 10. For any claim about earlier or later material that this workshop cannot check, say so and why.

Equivalent route (no AI required)

No AI account is required for this workshop. This route assesses the same objectives, Objective 6 (analyze perfect competition and monopoly with the profit-maximizing rules (P = MC for a price taker; MR = MC for a monopolist), the shutdown rule, long-run entry and exit, and the deadweight loss of market power) and Objective 5 (describe a firm's short-run production and costs — total, marginal, and average product; diminishing marginal returns; and fixed, variable, total, average, and marginal cost — and distinguish accounting profit from economic profit), takes comparable effort of about the same 90 minutes, uses the same rubric, and earns the same credit. Instead of the chatbot, critique this flawed analysis of the hay farm, printed here in full: "At 60 dollars the farm should sell loads until the price equals average total cost, so it sells 3 loads. At 30 dollars the farm loses money, so it should shut down at once. The 47-dollar average total cost is what one more load costs. When hay falls to 30, the farm's supply curve shifts left, and when new farms enter, market demand for hay rises. In the long run the farm earns zero profit, so its owner earns nothing, and the 72 dollars at 60 is only accounting profit. P = MC is the rule every firm uses. The farm faces inelastic demand, since its price never changes, and the zero slope of its demand line is its elasticity; the price change also means demand for hay changed. The government should rescue hay farmers. The farm should grow only hay because it grows hay fastest. A tax on each load is paid entirely by the farm, a 40-dollar limit is a price floor, and the farm should add its dust to its marginal cost." Mark every slip, name the failure each shows, correct each one by hand against your own tables and Chapter 10, and flag each claim about earlier or later material that this workshop cannot check. Submit the marked-up analysis with your corrections in place of the chatbot report and share link.

Part 7 — What to Submit

• The two completed scaffold tables, from a spreadsheet, Desmos, or by hand
• Written answers to all six analysis questions
• The chatbot critique report with its share link, or the equivalent route's marked-up correction of the printed flawed analysis

Deliverable:

A short Model Workshop report on the hay farm: two completed tables (the cost table and the four-price decision table), written answers to six analysis questions, and a critique of a chatbot's answers about the same farm, or, on the equivalent route, a marked-up correction of the printed flawed analysis. Submit in any accessible file type or as a link; a recorded response may be submitted as audio or video with a transcript, or as text. Choose how you show it: written answers, a recorded explanation with a transcript, or a labelled sketch that describes the price line, the marginal-cost curve, and the average-total-cost curve in words with a short note; every form is graded by the same criteria.

Rubric

The rubric below shows how each submitted part is evaluated; bands are full, partial, or none.

Workshop evaluation criteria

Criterion	Full	Partial	None
Cost table built	Marginal cost, average variable cost, and average total cost are computed for 1 to 6 loads with each step shown, and the lowest average variable cost and lowest average total cost are named with what each one decides.	The table is mostly complete, but one or two values are wrong, or the lowest points are not named or explained.	No cost table, or the averages computed by subtracting instead of dividing.
Output and profit at four prices	At each price the loads are chosen by comparing the price with marginal cost on the rising part, revenue and total cost are shown, profit or loss is computed, and the 60-dollar profit is confirmed as price minus average total cost, times loads, with each result read in a plain sentence.	Most prices are worked, but one output choice or profit is wrong, output is set where price equals average total cost once, or the plain sentences are missing.	No output choices or profits, or output set where price equals average total cost throughout.
Shutdown decision explained	The loss from operating at 30 dollars is compared with the fixed cost lost by closing, the price is compared with the lowest average variable cost, the farm operates at 30 and shuts down at 18, and the cost paid either way is named.	The decision is right at one price, or the comparison is made without naming the cost paid either way, or the test uses average total cost once.	No shutdown decision, or the farm told to close whenever it takes a loss.
Long run and zero economic profit	Entry after a profitable stretch is shown as market supply shifting right and lowering the price to the lowest average total cost, and zero economic profit there is read as a normal return on the owner's time and money.	The direction of the shift or the long-run price is right, but the other is missing, or zero economic profit is left unexplained.	No long-run answer, or entry said to shift market demand, or zero economic profit read as earning nothing.
Limitation and reflection	A real limitation of the model is named with its effect on an answer, and the chosen reflection option is answered with a specific example described in words.	The limitation is vague or not linked to an answer, or the reflection is missing.	No limitation and no reflection.
AI critique or equivalent correction	The chatbot's reply, or the printed flawed analysis on the equivalent route, is quoted, at least two slips are named with the failure each shows, each is corrected by hand, and claims about earlier or later material are flagged; either route earns this band equally.	One slip is named and corrected on either route, or slips are named without a correction.	No critique on either route, or the chatbot's reply is pasted without any check.

Quality Gate

• Every marginal cost is a difference of two total costs and every average is a cost divided by loads, shown by formula or by hand, never from memory or a chatbot.
• Output at each price follows P = MC on the rising part of marginal cost, never price equals average total cost.
• Every profit subtracts total cost from revenue, and the 60-dollar profit is checked as price minus average total cost, times loads.
• The shutdown decision compares the price with the lowest average variable cost and the loss from operating with the fixed cost lost by closing.
• Entry is shown as market supply shifting right and exit as market supply shifting left, with the long-run price named, and no market quantity or number of farms is invented.
• Zero economic profit is read as a normal return on the owner's time and money, not as earning nothing.
• Every judgment about what the farm or the market ought to do is labelled normative.
• No real-world price, cost, statistic, or study is invented anywhere in the submission.
• The critique quotes the chatbot, or the printed flawed analysis, and corrects each slip by hand.