A purely competitive wheat farmer can sell any wheat he grows for $25 per bushel
ID: 1191528 • Letter: A
Question
A purely competitive wheat farmer can sell any wheat he grows for $25 per bushel. His five acres of land show diminishing returns 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.
b. If the marginal cost of planting and harvesting an acre is $20,000 per acre for each of the five acres, how many acres should the farmer plant and harvest? acres.
Explanation / Answer
b. Three acres at maximuM. as after that MC will be higher than MR.
numbers of Acres That Acre's Yield That Acre's Revenue TR MR 0 0 0 0 NA 1 1,000 25,000 25,000 25,000 2 900 22,500 47,500 22,500 3 800 20,000 67,500 20,000 4 700 17,500 85,000 17,500 5 600 15,000 100,000 15,000