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Ag Econ notes on packet

Ag Econ notes on packet - information published from...

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Ag Econ notes on packet classical production function there is always a production function if you are taking something in and then making something else from it. production function is a way to find the best balance of all of the factors to be the most profitable production function (aka yield response curve) immediate run – all are fixed short run – at least one inmput is fixed long run – all imputs are variable Stage 1 – using too little variable imput relative to fixed imput, marginal profit is increasing, it reaches a maximum. first point marked on graph is inflection point (the point where the graph STOPS increasing at an increasing rate and switches to increasing at a decreasing rate) where marginal and average price of production meet, that is the end of section 1. stage 2 – rational area, we will produce some where in this area, combine other info stage 3 – using too much variable imput relative to fixed imput (no one will rationally produce here) at the bottom - X and Y are production functions, will see this all the time through
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Unformatted text preview: information published from LGU (Land grant universities) what is the price of x? (COULD BE ON THE TEST!) TAKE X/TVX = price TC = total variable cost + total fixed cost Average fixed cost average variable cost average total cost Marginal cost Profit maximizing decision rule Marginal revenue is just slightly greater than marginal cost marginal revenue should be equal or close to price of product Price of y = $4, you should produce somewhere between 230 and 240 bushels (look at the MR) if I maximize profit will minimize loses On the last page don’t worry about column six cost and revenue curves for the classice production function table max profit is where your total revenue and your total cost are furthest apart when the slopes of Marginal revenue and marginal costs are equal, that is your point of most efficient production profit is the area above the cost of production typically these cost curves are going to be U shaped because...
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