Suppose the production functions of the decision maker below indicate the effect of seeding rate on yield in the two states: y1 = −1.6 + 0.085x − 0.0005x2 wet season y2 = −1.7 + 0.087x − 0.0006x2 dry season with yi the yield per hectare in tonnes according to state i; where x is the seed rate in kilograms per hectare. For a wet year i = 1 and a dry year i = 2. These functions are shown in the following figure. Suppose the price of wheat is pw = 150$/t, the price of seeds px = 0.15$/kg and that the other variable costs are v = 110$/ha on a sown area of a = 50ha. Calculate the net income of this farmer in the above case. What is the optimal decision for the farmer in this case?
Suppose the production functions of the decision maker below indicate the effect of seeding rate on yield in the two states: y1 = −1.6 + 0.085x − 0.0005x2 wet season y2 = −1.7 + 0.087x − 0.0006x2 dry season with yi the yield per hectare in tonnes according to state i; where x is the seed rate in kilograms per hectare. For a wet year i = 1 and a dry year i = 2. These functions are shown in the following figure. Suppose the price of wheat is pw = 150$/t, the price of seeds px = 0.15$/kg and that the other variable costs are v = 110$/ha on a sown area of a = 50ha. Calculate the net income of this farmer in the above case. What is the optimal decision for the farmer in this case?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Suppose the production functions of the decision maker below
indicate the effect of seeding rate on yield in the two states:
y1 = −1.6 + 0.085x − 0.0005x2 wet season
y2 = −1.7 + 0.087x − 0.0006x2 dry season
with yi the yield per hectare in tonnes according to state i;
where x is the seed rate in kilograms per hectare.
For a wet year i = 1 and a dry year i = 2.
These functions are shown in the following figure.
Suppose the price of wheat is pw = 150$/t, the price of seeds
px = 0.15$/kg and that the other variable costs are v = 110$/ha on a sown area of a = 50ha.
Calculate the net income of this farmer in the above case.
What is the optimal decision for the farmer in this case?
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