Question 6 (of 11) Save & Exit Submit A purely competitive wheat farmer can sell
ID: 1109546 • Letter: Q
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Question 6 (of 11) Save & Exit Submit A purely competitive wheat farmer can sell any wheat he grows for $30 per bushel. His five acres of land show diminishing retums because some are better suited for wheat production than others. The first acre can produce 1,000 bushels of wheat, the second acre 900, the third 800, and so on. a. Use the table below to answer the following questions. How many bushels will each of the farmer's five acres produce? How much revenue will each acre generate? What are the TR and MR for each acre? Instructions: Enter your answers as whole numbers. of That Acre's That Acre's TR MR $0 S0 b. If the marginal cost of planting and harvesting an acre is $21,000 per acre for each of the five acres, how acresExplanation / Answer
We have the following information
Number of Acres
That Acre's Yield (Y)
Price ($) (P)
That Acre's Revenue (P×Y) ($)
Total Revenue (TR) ($)
Marginal Revenue (MR) ($)
Marginal Cost (MC) ($)
0
-
30
0
0
-
-
1
1,000
30
30,000
30,000
30,000
21,000
2
900
30
27,000
57,000
27,000
21,000
3
800
30
24,000
81,000
24,000
21,000
4
700
30
21,000
102,000
21,000
21,000
5
600
30
18,000
120,000
18,000
21,000
The profit maximizing point is where the marginal revenue (MR) is equal to the marginal cost (MC). This happens at the 4 acres. So, the farmer should plant and harvest 4 acres of land.
Number of Acres
That Acre's Yield (Y)
Price ($) (P)
That Acre's Revenue (P×Y) ($)
Total Revenue (TR) ($)
Marginal Revenue (MR) ($)
Marginal Cost (MC) ($)
0
-
30
0
0
-
-
1
1,000
30
30,000
30,000
30,000
21,000
2
900
30
27,000
57,000
27,000
21,000
3
800
30
24,000
81,000
24,000
21,000
4
700
30
21,000
102,000
21,000
21,000
5
600
30
18,000
120,000
18,000
21,000
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