Econ 416 assignment 3 - Assignment 3 1) a. The rent per...

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Assignment 3 1) a. The rent per acre the family can hope to obtain by leasing out the land is $800 per acre ($3000 output - $2,200 labor) b. For a six-person family the minimum acreage necessary for it to be optimal to lease out the land is four acres. If the family farmed the land themselves they could profit $3,000 ($9,000 output - $6,000 wages). Since the compensation on leased land is $1,100 per person, the family would need a minimum of four acres for them to lease the land and have a profit higher than farming the land themselves ($12,000 output - $8,800 wages = $3,200 profit). c. The threshold acreage after which the family will no longer lease out the land, but hire a supervisor and employ wage labor instead is 11 acres. Profits from 11 acres of land are $8,800 when the land is leased ($33,000 output - $24,200 wages), while profits from hiring wage labor and a supervisor are $9,000 ($33,000 output - $24,000). 2) A risk premium is the minimum amount a person needs to be
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Econ 416 assignment 3 - Assignment 3 1) a. The rent per...

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