Suppose that you own a 10 acre plot of land that you would like to rent out to wheat farmers. For them, bringing in a harvest involves $30 per acre for seed, $80 per acre for fertilizer, and $70 per care for equipment rentals and labor. With these inputs, the land will yield 40 bushels of wheat per acre. Now suppose the price at which wheat cab be sold is $7 per bushel and that farmers want to earn a normal profit of $10 per acre. What is the most that any farmer would pay to rent your 10 acres? What if the price of wheat rose to $8 per bushel?
Suppose that you own a 10 acre plot of land that you would like to rent out to wheat farmers. For them, bringing in a harvest involves $30 per acre for seed, $80 per acre for fertilizer, and $70 per care for equipment rentals and labor. With these inputs, the land will yield 40 bushels of wheat per acre. Now suppose the price at which wheat cab be sold is $7 per bushel and that farmers want to earn a normal profit of $10 per acre. What is the most that any farmer would pay to rent your 10 acres? What if the price of wheat rose to $8 per bushel?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Suppose that you own a 10 acre plot of land that you would like to rent out to wheat farmers. For them, bringing in a harvest involves $30 per acre for seed, $80 per acre for fertilizer, and $70 per care for equipment rentals and labor. With these inputs, the land will yield 40 bushels of wheat per acre. Now suppose the price at which wheat cab be sold is $7 per bushel and that farmers want to earn a normal profit of $10 per acre.
What is the most that any farmer would pay to rent your 10 acres?
What if the price of wheat rose to $8 per bushel?
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