2. Mary's Little Lamb Ranch raises sheep. Currently Mary has 6 ranch hands, 500 acres of land and 3,000 sheep. The marginal product of adding ranch hands is 50 sheep and the marginal product of an acre of land is 5 sheep. Bob's Buffalo Ranch raises buffalo. Currently Bob has 8 ranch hands, 1,000 acres of land and 500 buffalo. The marginal product of adding ranch hands is 10 buffalo and the marginal product of an acre of land is 1 buffalo. If sheep sell for $100 per head and buffalo sell for $500 per head, is the use of land allocatively efficient (yes or if no what reallocation should occur use of ranch hands allocatively efficient (yes or if no what reallocation should occur is the Explain why briefly below.

2. Mary's Little Lamb Ranch raises sheep. Currently Mary has 6 ranch hands, 500 acres of land and 3,000 sheep. The marginal product of adding ranch hands is 50 sheep and the marginal product of an acre of land is 5 sheep. Bob's Buffalo Ranch raises buffalo. Currently Bob has 8 ranch hands, 1,000 acres of land and 500 buffalo. The marginal product of adding ranch hands is 10 buffalo and the marginal product of an acre of land is 1 buffalo. If sheep sell for $100 per head and buffalo sell for $500 per head, is the use of land allocatively efficient (yes or if no what reallocation should occur use of ranch hands allocatively efficient (yes or if no what reallocation should occur is the Explain why briefly below.

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter3: Economic Decision Makers

Section: Chapter Questions

Problem 1.2P

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