A grape grower with a vineyard in the Edna Valley and in the Carneros appellation in Sonoma/Napa has a contract to produce 18 tons of pinot noir grapes for Gallo. The current allocation of the 18 tons results in a marginal cost of production in the Edna Valley vineyard of $800 (MCV = $800) and a marginal cost of production in the Carneros vineyard of $1200 (MCC = $1200). Explain whether the grower should move one ton of production from the Edna Valley to Carneros or vice versa. Make sure to provide a clear explanation of the outcome consistent with the idea of the equimarginal principle. Make sure to use the correct terms and units.
A grape grower with a vineyard in the Edna Valley and in the Carneros appellation in Sonoma/Napa has a contract to produce 18 tons of pinot noir grapes for Gallo. The current allocation of the 18 tons results in a marginal cost of production in the Edna Valley vineyard of $800 (MCV = $800) and a marginal cost of production in the Carneros vineyard of $1200 (MCC = $1200). Explain whether the grower should move one ton of production from the Edna Valley to Carneros or vice versa. Make sure to provide a clear explanation of the outcome consistent with the idea of the equimarginal principle. Make sure to use the correct terms and units.
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter11: Price And Output Determination: Monopoly And Dominant Firms
Section: Chapter Questions
Problem 6E
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Problem 1: please show all work for all parts please.
![Problem 1
A grape grower with a vineyard in the Edna Valley and in the Carneros appellation in
Sonoma/Napa has a contract to produce 18 tons of pinot noir grapes for Gallo. The current
allocation of the 18 tons results in a marginal cost of production in the Edna Valley vineyard of
$800 (MCEV = $800) and a marginal cost of production in the Carneros vineyard of $1200 (MCC
= $1200). Explain whether the grower should move one ton of production from the Edna Valley
to Carneros or vice versa. Make sure to provide a clear explanation of the outcome consistent
with the idea of the equimarginal principle. Make sure to use the correct terms and units.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb8ff7d78-49ea-4ef0-aa04-f35dca459cbe%2F8e0bbf2d-4ede-483b-b322-9e49805c5913%2Ffju8foh_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Problem 1
A grape grower with a vineyard in the Edna Valley and in the Carneros appellation in
Sonoma/Napa has a contract to produce 18 tons of pinot noir grapes for Gallo. The current
allocation of the 18 tons results in a marginal cost of production in the Edna Valley vineyard of
$800 (MCEV = $800) and a marginal cost of production in the Carneros vineyard of $1200 (MCC
= $1200). Explain whether the grower should move one ton of production from the Edna Valley
to Carneros or vice versa. Make sure to provide a clear explanation of the outcome consistent
with the idea of the equimarginal principle. Make sure to use the correct terms and units.
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