Agriculture Economics

assume that the price of sorghum grain is $6.00 per bushel. When we apply 30 tons of fertilizer on our 20 acres of sorghum grain, the total yield is 1,000 bushels. When we apply 50 tons of fertilizer, the total yield is 1,500 bushels. what is the marginal value product per ton of fertilizer?

$150/ton

level of output at which average total cost (ATC) equals average revenue or market price

Breakeven Output

the variable costs incurred by the business in the current period per unit of output

Average Variable Cost

T or F: a profit-maximizing firm will use an input up to the point where the cost of the input equals the marginal revenue received by the firm

False

specific form of current production costs that do not vary with the level of output or input use

Fixed Costs

as successive units of a variable input are added to a production process with other inputs held constant, the marginal physical product (MPP) eventually decreases

Law of Diminishing Marginal Returns

the change in total cost (TC) of production as the output or total product of the business is expanded

Marginal Cost

the change in revenue earned by the business as it employees an additional unit of an input, holding other resources use constant

Marginal Value Product

level of input use where the marginal value product (MVP) equals the marginal input cost

Profit Maximizing Level of Input Use

level of output at which average variable costs (AVC) equal average revenue or the market price

Shutdown Output

is the point at which the marginal physical product curve for a particular input is rising but still lies above the average physical product (APP) curve

Stage 1

T or F: an example of average physical product (APP) in agriculture is the yield or number of bushels of corn produced per acre.

True

T or F: average variable cost (AVC) is equal to the firm's total variable costs (TVC) divided by its total output

True

T or F: marginal cost is the additional cost created by the next, or marginal unit of the variable input

True

which of the following would provide the best evidence that a commodity is being produced under conditions of perfect competition? a) the profits of producers are low b) the supply curve is perfectly inelastic c) the demand curve facing any one producer is perfectly elastic d) the production of the commodity is large

b) the supply curve is perfectly inelastic

the level of output at which average total cost (ATC) equals average revenue or market price

breakeven output

the marginal physical product (MPP) of labor is a) the output which labor could produce without other factors of production b) the amount of extra output that is produced when one worker is added and other factors of production are increased proportionally c) the additional revenue received by the firm by selling the out of one additional worker d) the amount of extra output that is produced when one extra worker is added and other factors of production are held constant

c) the additional revenue received by the firm by selling the out of one additional worker

which of the following is true? a) if total economic surplus is positive due to a shift in a demand or supply curve, society is better off b) AFC+AVC=ATC c) the law of diminishing marginal returns states that as the use of an input increases, its MPP will eventually fall d) all of the above

d) all of the above

the change in output or total product the business would achieve in the current period by expanding the use of an input by another unit

marginal physical product

the stage of production where the total physical product curve begins to decline corresponds

stage 3

the sum of all individual categories of production costs that do vary with the level of production

total variable cots (TVC)

T or F: The marginal value product (MVP) for labor is equal to the marginal physical product (MPP) for labor time the product price

true