A farmer, when choosing how much land to use, estimates that he can get the following...
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A farmer, when choosing how much land to use, estimates that he can get the following yearly revenue for each land size, keeping constant all other inputs: Acres 0 1 2 3 456 7 Total Revenue $0 $250 $450 $600 $700 $750 $750 $700 Answer the following questions only with the numbers and without decimals (all answers should be integers), for example, "3" instead of "3 acres" or $3": a) If the yearly rent per acre of land is $80, how many acres does he rent? b) If there are only 5 acres of land available, what is the highest price he would be willing to pay per acre (assuming he gets all the land)? c) Again assuming there are only 5 acres of land available (which can be rented separately, but one acre at a time), but that there are several (say, more than 10) farmers with the same revenue table as above, what is going to be the market price of the yearly rent per acre (assuming that each acre is exactly the same as the other, but there is decreasing marginal productivity from one farmer increasing the land he tends to)? d) Again assuming there are only 5 acres of land available (which can be rented separately, but one acre at a time, and the landlord wants to rent them all and cannot price discriminate), but that there are several (say, more than 10) farmers with the same revenue table as above, what is going to be the market price of the yearly rent per acre (assuming that there is no decrease in productivity from increasing the land a farmer tends to, and that the decreasing marginal revenue product is due to different quality of soil)? A farmer, when choosing how much land to use, estimates that he can get the following yearly revenue for each land size, keeping constant all other inputs: Acres 0 1 2 3 456 7 Total Revenue $0 $250 $450 $600 $700 $750 $750 $700 Answer the following questions only with the numbers and without decimals (all answers should be integers), for example, "3" instead of "3 acres" or $3": a) If the yearly rent per acre of land is $80, how many acres does he rent? b) If there are only 5 acres of land available, what is the highest price he would be willing to pay per acre (assuming he gets all the land)? c) Again assuming there are only 5 acres of land available (which can be rented separately, but one acre at a time), but that there are several (say, more than 10) farmers with the same revenue table as above, what is going to be the market price of the yearly rent per acre (assuming that each acre is exactly the same as the other, but there is decreasing marginal productivity from one farmer increasing the land he tends to)? d) Again assuming there are only 5 acres of land available (which can be rented separately, but one acre at a time, and the landlord wants to rent them all and cannot price discriminate), but that there are several (say, more than 10) farmers with the same revenue table as above, what is going to be the market price of the yearly rent per acre (assuming that there is no decrease in productivity from increasing the land a farmer tends to, and that the decreasing marginal revenue product is due to different quality of soil)?
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SOLUTION a If the yearly rent per acre of land is 80 he will rent as many acres as his total revenue from farming exceeds the cost of renting the land Since the farmers revenue table shows that his to... View the full answer
Related Book For
Practical Management Science
ISBN: 978-1305250901
5th edition
Authors: Wayne L. Winston, Christian Albright
Posted Date:
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