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In 1996 dairy farmers, hurt by a decade of low milk prices, began reducing their herds. Subsequently Imora Ayala, a farmer, said he was getting GH¢16 per 100 pounds of milk, rather than GH¢12, which he had gotten earlier. i. Why did the price increase? ii. Dairy cattle are often fed corn. When Ayala got GH¢16 per 100 pounds of milk, he paid GH¢5 a bushel for corn; but when he got GH¢12 per 100 pounds of milk, he paid GH¢2.50 a bushel for corn. Does this mean that Ayala made less money when the price of milk was GH¢16 than when it was GH¢12?

In 1996 dairy farmers, hurt by a decade of low milk prices, began reducing their herds. Subsequently Imora Ayala, a farmer, said he was getting GH¢16 per 100 pounds of milk, rather than GH¢12, which he had gotten earlier. i. Why did the price increase? ii. Dairy cattle are often fed corn. When Ayala got GH¢16 per 100 pounds of milk, he paid GH¢5 a bushel for corn; but when he got GH¢12 per 100 pounds of milk, he paid GH¢2.50 a bushel for corn. Does this mean that Ayala made less money when the price of milk was GH¢16 than when it was GH¢12?

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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In 1996 dairy farmers, hurt by a decade of low milk prices, began reducing their herds. Subsequently Imora Ayala, a farmer, said he was getting GH¢16 per 100 pounds of milk, rather than GH¢12, which he had gotten earlier. i. Why did the price increase? ii. Dairy cattle are often fed corn. When Ayala got GH¢16 per 100 pounds of milk, he paid GH¢5 a bushel for corn; but when he got GH¢12 per 100 pounds of milk, he paid GH¢2.50 a bushel for corn. Does this mean that Ayala made less money when the price of milk was GH¢16 than when it was GH¢12?
Transcribed Image Text:In 1996 dairy farmers, hurt by a decade of low milk prices, began reducing their herds. Subsequently Imora Ayala, a farmer, said he was getting GH¢16 per 100 pounds of milk, rather than GH¢12, which he had gotten earlier. i. Why did the price increase? ii. Dairy cattle are often fed corn. When Ayala got GH¢16 per 100 pounds of milk, he paid GH¢5 a bushel for corn; but when he got GH¢12 per 100 pounds of milk, he paid GH¢2.50 a bushel for corn. Does this mean that Ayala made less money when the price of milk was GH¢16 than when it was GH¢12?
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