LSC CUMBERLAND EC202 MICRO>PKG<
21st Edition
ISBN: 9781260586992
Author: McConnell
Publisher: MCG
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Chapter 18, Problem 1P
To determine
Maximum rent paid by the farmer.
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Suppose that you own a 10-acre plot of land that you would like to rent out to wheat farmers. For them, bringing in a harvest involves $30 per acre for seed, $80 per acre for fertilizer, and $70 per acre for equipment rentals and labor. With these inputs, the land will yield 40 bushels of wheat per acre. If the price at which wheat can be sold is $5 per bushel and if farmers want to earn a normal profit of $10 per acre, what is the most that any farmer would pay to rent your 10 acres? What if the price of wheat rose to $6 per bushel?
Suppose that you are a cattle rancher. You are deciding when to take your cattle to market to sell. You currently have a herd of 100 cattle. Each cow currently weighs 650 pounds and is gaining 50 pounds per month. Your feed costs are $40 per month per cow. Cattle prices are currently $8 per pound, but have been falling at the rate of $0.10 per month. If you are maximizing profits, how many months from now should you sell your cows?
Matthew grows wheat on his farm. One of his fields produced 66.8 bushels of wheat this year. If wheat is currently selling for $5.40 per bushel, how much will Matthew earn from this field?
Chapter 18 Solutions
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