Purchase Solution

Maximizing Potato Field Profits Using Marginal Analysis

Not what you're looking for?

Ask Custom Question

Doug's farm in Idaho has four major fields that he uses to grow potatoes. The productivity of each field follows:

___________ANNUAL YIELD, HUNDREDS OF POUNDS___

Field 1 10,000
Field 2 8,000
Field 3 5,000
Field 4 3,000

Assume that each field is the same size and that the variable costs of farming are $25,000 per year per field. The costs cover labor and machinery time, which is rented. Doug must decide each year how many fields to plant. Last year, potato farmers received $6.35 per 100 pounds.

How many fields did Doug plant? Explain.

By this year the price of potatoes had fallen to $4.50 per 100 pounds. How will this price decrease change Doug's decision? How will it affect the value of Doug's land?

Purchase this Solution
Solution Summary

This solution shows how a farmer will use marginal analysis to decide how many potato fields to plant given the market price of potatoes.

Solution Preview

See the attached file. Profit increases as long as Marginal Revenue (MR) > Marginal Cost (MC). When the price ...

Purchase this Solution
Free BrainMass Quizzes
Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.

Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.

Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.

Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.

Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.

View More Free Quizzes
Related BrainMass Solutions

  • Managerial Economics - Farmer Case Study

    ii) See the attached file "Potato Farms". Each farmer maximizes his profit or minimizes his loss by producing the quantity at which Marginal Revenue (MR) = Marginal Cost (MC).

  • Monopolistic to monopoly

    Usually, a monopolist has to reduce output to reach his profit maximizing point. The output where his marginal cost curve cuts the market demand curve is lower than the output in monopolistic competition.

  • marginal analysis

    276627 Assess the profit potential using marginal analysis How would a company's profitability in their toothpaste division would be impacted by an expansion. Assess the profit potential using marginal analysis.

  • Maximizing profits in a monopolistically competitive model

    Therefore, we cannot simply base the analysis on your own firm's marginal cost only.

  • Maximizing your profits

    MC=4Q at Q=166.67 MC=4*166.67=$666.67 Thank you for using Brainmass. The following posting helps with economics problems. These include questions about maximizing profits and calculating units to produce costs.

  • Finding Profit-Maximizing Level of Production

    136575 Maximizing Profits 1. Groovy Tuesday, a clothing manufacturer, has found that their costs can be approximated by the equation: C = 500 + 2Q2.

  • Calculating profit maximizing price/output combination

    Calculate TLC's profit-maximizing price/output combination and economic profits before meeting DOL guidelines. B. Calculate the profit-maximizing price/output combination and economic profits after TLC has met DOL guidelines. C.

  • Profit Maximizing Point

    Your monopoly's total cost function is TC=20+5Q, and marginal cost is MC=5. What are your profit-maximizing quantity (Q) and price (P), and if any, your economic profits? In the short-run, how can you make more profits? 1.

  • Financial Management - CPI

    The Board asked you to assess the profit potential using marginal analysis. It is assumed that the toothpaste market is perfectly competitive and the current price of a case of toothpaste is $42.00.

View More Related Solutions