A farmer is deciding whether or not to add fertilizer to his or her crops. If the farmer adds 1 pound of fertilizer per acre, the value of the resulting crops rises from $80 to $100 per acre. According to marginal analysis, the farmer should add fertilizer if it costs less than:

Question

Dana Finley

Business

3 September, 19:27

A farmer is deciding whether or not to add fertilizer to his or her crops. If the farmer adds 1 pound of fertilizer per acre, the value of the resulting crops rises from $80 to $100 per acre. According to marginal analysis, the farmer should add fertilizer if it costs less than:

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Answers (1)

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Ashlynn Miller · Answer 1

Fertiliser should cost less than $20 per pound.

Explanation:

Marginal analysis states that the marginal benefit of taking an action should put weight the marginal cost incurred for taking the action.

The additional pound of fertiliser resulted in a crop gain of $100-$80 = $$20

So the one pound of fertiliser added should be less than $20 for the additional of fertiliser to be economically profitable.

If for example the amount of one pound of fertiliser is more than $20 the business will start to make a loss.