lectur24-page2

lectur24-page2 - E(variable cost)= $30,000/year for...

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2. Opportunity arises: You have been wanting to double your production for some time now when a neighbor tells you he has 715 acres of cropland he will rent you for $45.00 per acre payable at harvest. (therefore no interest). E(price)= $3.00/bu. E(output)= 100,000 bushels Total sunk cost = $15,000/year
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Unformatted text preview: E(variable cost)= $30,000/year for additional mach. & equip. $32,175 rent for land $80,000 other variable inputs, owned land $113,935 other variable inputs, rented land E(total variable cost)= $256,110 E(total cost)= $271,110 ? Should we produce and sell the additional 50,000 bushels ?...
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