Assignment 3 due Tuesday, January 30 at 9:00 am 1. Assume wheat is produced in t
ID: 1148108 • Letter: A
Question
Assignment 3 due Tuesday, January 30 at 9:00 am 1. Assume wheat is produced in the Sacramento Valley using irrigation water and nitrogen tertilizer (together with land, labor, machinery, seed and other inputs.) Assume for this on that using 35 pounds of nitrogen per acre and 20 acre-inches of rrigation water produces 600 pounds of wheat (approximately 10 bushels) which sells for S0.50 per pound Nitrogen costs $0.40 per pound. Assume that if 30 pounds of nitrogen were applied (with the same costs for all other inputs) yield would be 594 pounds and that if40 pounds of nitrogen were used; yield would be 602 pounds of wheat. Use these numbers to explain why an application rate of 35 pounds of nitrogen may seem reasonable for a grower deciding simply how much fertilizer to use. Now consider irrigation. Assume the water costs $6 per acre-inch and applying 19-acre inches rather than 20 would reduce yield to 580 pounds and increasing irrigation water to 21 acre-inches would increase yield to 605. 2. Explain why 20 inches may seem like a reasonable choice for water application. Now the farmer learns that at an application rate of 35 pounds per acre some of the nitrogen leaches into the water he uses for irrigation and contaminates it with salts. With 35 pounds of applied nitrogen, wheat yield will still be 600 the first year, but lower in the following year and decline very gradually in future years to 520. Assume that the application rate of 30 would continue to yield 594 the first year and into the future. Assume the farmers best guess is that prices of wheat and all inputs will remain unchanged. 3. a. Explain why this information would cause the farmer to use less fertilizer than 35 b. Is there an externality associated with the choice of fertilizer use in question 3? c. Why does the interest rate or discount rate affect the farmers choice of fertilizer? 4. Now UC Davis scientists discover that "excess" fertilizer use affects the quality of drinking water for rural communities. For wheat, nitrogen use at 30 pounds per acre or less has no adverse effects but use above 30 pounds per acre reduces water quality. Start with the situation of question 1. (That is do not use the situations in questions 2 and 3.) a. Is there an externality to nitrogen fertilizer use on wheat? b. Does that mean fertilizer should be banned on wheat? Name two potential government policies that might help to deal with the externality? c. Page 1 of 2Explanation / Answer
1. We need to know what are the factors of production that is land, labour, capital, raw materials and enterprise.
Now in this case the first case seems to be more appropriate where 35 pounds of nitrogen is being used with the irrigation facility. Now the outcome production of this is 6oo pounds of wheat. The quantity of fertlizer used is appropriate that means not excess not less it is upto the mark to kill all the bacteria present in the farm and it will not harm the crops and spoil it. since many a times there are chances when the crop gets spoil becaise of excess use of fertilizer. A few percent of fertilizer would be added to in the farm.
2. In case of irrigation the water supply should also be adequate and in case of 19 acres land. The cost per hectare would be $6 that is a balance between the left other land and the outcome production is intermediate too.
3.(a) The reason behind the use of less fertilizer is that the nitrogen leachens had developed in the water due to the excess fertilizer and the application cost had also changed.
(b) No, he didn't change the fertlizer but he used the salt in order to reduce the nitrogen lochens that developed in the water with respect that it will reduce its production.
(c) The choices changes as per its feedback. Sometimes it happens that you don't get idea until you don't apply in this case even the farmer later learned that the lichens are developing so he contaminated it with the salt. There are many other factor that the farmer keep in mind while farming that is land, labour etc.
4.(a) Some quantity of fertlizer is must used in crops so that the bacteria may not develop in the crop. But its excess use can cause us a lot of harm to us especially in the rural llaces where no filteration process takes place. It may take place but in rare conditions.
(b) As we discussed earlier some quantity is must added to kill bacteria beacuse they may cause us diseases and farmers must take care not to add excess or bad fertilizer to the crop. His choice decide the production.
(c) Ministry of agriculture is responsible for the all the look out in the agriculture sector.
CLEAN AIR ACT
CLEAN WATER ACT
COOPERATE AVERAGE FUEL ECONOMY