lectur8-page41

lectur8-page41 - If we find that soybean production is $40...

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

View Full Document Right Arrow Icon
Now you would need to look at production costs of each crop: 1.If it costs $40 more to grow soybeans, then you would be indifferent as to which you would choose to produce. 2. If it costs less than $40 more to grow soybeans, then you would choose to produce soybeans. That depends. We have not looked at the production cost of the equation yet. Remember, we want to maximize profits, not total revenue. Profits are equal to total revenue less all economic costs (accounting cost and opportunity cost). Now we have to budget the production cost for each crop.
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: If we find that soybean production is $40 per acre more expensive than corn production, then we would be indifferent as to which crop to really put in the ground. Why? Because there would be not difference in the profitability of the two alternatives. If we find that soybean production is $30 per acre more expensive than corn production, then we would plant soybeans because we would make $10 more per acre than planting corn....
View Full Document

This note was uploaded on 12/29/2011 for the course ECO 210 taught by Professor Malls during the Fall '10 term at SUNY Stony Brook.

Ask a homework question - tutors are online