Question

considering changing the farm's name to Blissful Acres uestions. Hayfever Farms is an 80-acre hay farm in Colorado. The owners and growing strawberries instead of hay. Use the table of marginal cost (MC) and marginal revenue Number of MR$ MRS MCS (hay) (strawberries) 730 5600 730 5600 5600 acres 10 730 5600 730 5600 730 5600 3200 5600 6700 5600 730 730 80 5600 If they continue to only grow hay, how many acres should Hayfever Farms devote to growing hay in order to maximize profits? acres of hay: acres If the owners decide to only grow strawberries, how many acres should Blissful Acres devote to growing strawberries in

Answer 1

Profits can be maximised at a point where marginal revenue equals marginal cost. The corresponding output and price where marginal revenue intersects marginal cost are the profit maximising output and price.

Hayfever farms should grow hay in 40 acres of land as at this point, marginal revenue equals marginal cost, that is 730.

Blissful acres should grow strawberries in 70 acres of land as at this point, marginal revenue equals marginal cost, that is 5600.