8 45 45 57 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 08 45 45 57

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: formation Revised Year Cost/Acre Yield/Acre Water/acre Returns 1 150 0 0.8 -150 2 280 7 4.5 700 3 300 7 4.5 680 Initial conditions: 50 acres 1yo, 10 acres 2yo. 4 400 5 5.7 300 Obj land 1 water 1 Init straw 1 Init straw 2 Init straw 3 Straw 1-2 y1 Straw 2-3 y1 Straw 3-4 y1 land 2 water 2 Straw 1-2 y2 Straw 2-3 y2 Straw 3-4 y2 land 3 water 3 Straw 1-2 y3 Straw 2-3 y3 Straw 3-4 y3 land 4 water 4 Straw 1-2 y4 Straw 2-3 y4 Straw 3-4 y4 land y5 water y5 Term straw 1 Term straw 2 Term straw 3 Year 1 Year 2 Year 3 Year 4 Year 5 Terminal Cond strawberries strawberries strawberries strawberries strawberries wheat 1 2 3 4 wheat 1 2 3 4 wheat 1 2 3 4 wheat 1 2 3 4 wheat 1 2 3 4 1 2 3 340 -150 700 680 300 340 -150 700 680 300 340 -150 700 680 300 340 -150 700 680 300 340 -150 700 680 300 160 110 20 1 1 1 1 1 1 0.8 4.5 4.5 5.7 1 1 1 -1 1 -1 1 -1 1 1 1 1 1 1 1 0.8 4.5 4.5 5.7 -1 1 -1 1 -1 1 1 1 1 1 1 1 0.8 4.5 4.5 5.7 -1 1 -1 1 -1 1 1 1 1 1 1 1 0.8 4.5 4.5 5.7 -1 1 -1 1 -1 1 -1 1 -1 1 -1 1 Here, 2 year old strawberries in the first year are limited by the 50 acres that were planted the year before. 3­year­old strawberries are limited to the 10 acres that were planted 2 years ago. le le le le le le le le le le le le le le le le le le le le le le le le le le le le 700 1200 50 10 0 0 0 0 700 1200 0 0 0 700 1200 0 0 0 700 1200 0 0 0 700 1200 0 0 0 Equilibrium with Known Life Equilibrium Disequilibrium models are large and often results are sensitive to hard­to­estimate terminal (or even initial) values. Equilibrium models provide an alternative approach. Here, the firm is assume...
View Full Document

Ask a homework question - tutors are online