Questions 1 to 3 refer to the following table: Suppose land rents for $500/acre

Question

Questions 1 to 3 refer to the following table: Suppose land rents for $500/acre and fertilizer cost $50 a ton. Fill in the blanks in the table. There are four grids in the below. Using the data from the table above, fill in the emit as follows: In part a draw the total product curve, and in part b draw the AP and MP curves. (Notice that some of the axes are labeled differently from those in Chapter 8.) In part c draw the TC, TVC, and TFC curves, and in pan J draw the AVC, ATC, and MC Curves. The price of fertilizer drops to $25 a ton. Fill in the table below and use these data to plot the new cost curves in the grids provided.

Explanation / Answer

AP = Total production divided by number of tons of fertilizer

MP = Change in production per unit change in fertilizer

TFC = Land cost

TVC = Fertilizer cost * Number of tons of fertilizer used

TC = TFC + TVC.

Average means, divided by number of bushels

MC = Change in cost/Increase in number of bushels produced

Acres Fertilizer Wheat AP MP TFC TVC TC AVC ATC MC 1 1 40 40 500 50 550 1.3 13.8 1 2 100 50 60 500 100 600 1.0 6.0 0.83 1 3 150 50 50 500 150 650 1.0 4.3 1.00 1 4 190 47.5 40 500 200 700 1.1 3.7 1.25 1 5 220 44 30 500 250 750 1.1 3.4 1.67 1 6 240 40 20 500 300 800 1.3 3.3 2.50 1 7 250 35.71429 10 500 350 850 1.4 3.4 5.00 1 8 255 31.875 5 500 400 900 1.6 3.5 10.00

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