Exam 1 Key

Exam 1 Key - AAE 320 Spring 2006 EXAM 1 NAME: _ANSWER KEY_...

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AAE 320 Spring 2006 EXAM 1 NAME: __________ ANSWER KEY _______________ DO NOT TURN THE PAGE UNTIL INSTRUCTED TO DO SO.
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1) (10 pts.) True or False? Mark your answer. a) T_ X _ F___ Dairy generates over half of Wisconsin farm cash receipts. b) T_ X F___ Wisconsin farmers produce over half of U.S. cranberries. c) T___ F_ X _ Wisconsin’s processing vegetable industry (snap beans, sweet corn, peas, potatoes) is very small by Midwestern standards. d) T___ F_ X _ Opportunity Cost is the cost of switching production practices to take advantage of a new opportunity. e) T___ F_ X _ In Strategic Management, a mission and goal are the same thing. 2) (15 pts.) You manage a vegetable farm and hire laborers. The table below reports how many carrot bunches are dug, cleaned, and ready for sale in an hour with different numbers of laborers. Laborers Hired Carrot Bunches Marginal Product Value of Marginal Product 3 55 -- -- 4 70 15 22.50 5 80 10 15.00 a) Using this table, show how to calculate the Marginal Product for one example, and then fill in the Marginal Product column in the table above. MP = Q/ X = (70 – 55)/(4 – 3) = 15 b) Carrot bunches sell for $1.50/bunch. Using this table, show how to calculate the Value of Marginal Product for one example, and then fill in the Value of Marginal Product column in the table above. VMP = P Q x MP = $1.50 x 15 = $22.50 c) What optimality condition defines the profit maximizing amount of the input to use? VMP = P
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Exam 1 Key - AAE 320 Spring 2006 EXAM 1 NAME: _ANSWER KEY_...

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