Mary and Orson own farms in Central Wisconsin. Mary owns Farm 1 comprised of 20 acres of
Question:
Mary and Orson own farms in Central Wisconsin. Mary owns Farm 1 comprised of 20 acres of land, while Orson owns Farm 2 comprised of 30 acres of land. The type of soil in each farm is different. For each acre of land assigned to apple production, Mary harvests 5 apples per year while
Orson harvests 8 apples per year. For each acre of land assigned to orange production, Mary harvests 10 oranges per year, while Orson harvests 9 oranges per year. Assume that Mary and Orson can produce either apples or oranges on an acre in any year.
1. ow consider that Orson can decide freely how many apples and oranges to harvest in both farms and that the sale price of apples and oranges is the same. If Orson wants to maximize the amount he earns, how many apples and oranges would he harvest? How would he divide the production of fruits between Farm 1 and Farm 2?
2. Return to the original setup where Orson owned only Farm 2. Draw the PPF of Orson if he now faces the following restriction: In order to start harvesting a particular type of fruit, he needs to install a special watering device that occupies 5 acres of land (no fruit will grow on the land devoted to this water device) and that is specific to the type of tree planted. In this sense, Orson could plant both types of trees at his farm, but then he would need to install two different watering devices (and he would lose 10 acres of land).
Quantitative Methods for Business
ISBN: 978-0324651751
11th Edition
Authors: David Anderson, Dennis Sweeney, Thomas Williams, Jeffrey cam