A farm co-op has over 6,000 acres available to plant with corn and soybeans. The farm co-op's maximum profit for planting 6,000 acres is $315,000 and the maximum profit for 6,008 acres is $315,320. What is the profit value of each additional acre of land? This value is called the shadow price of an acre of land. Round your answer to the nearest cent if necessary.
A)$320.00
B)$160.00
C)$35.56
D)$45.71
E)$40.00

Question

A farm co-op has over 6,000 acres available to plant with corn and soybeans. The farm co-op's maximum profit for planting 6,000 acres is $315,000 and the maximum profit for 6,008 acres is $315,320. What is the profit value of each additional acre of land? This value is called the shadow price of an acre of land. Round your answer to the nearest cent if necessary. ​
A)​$320.00
B)​$160.00
C)$35.56
D)$45.71
E)$40.00

Quizplus · Accepted Answer

The shadow price is calculated by taking the difference in profit for the additional acres and dividing by the number of additional acres. ($315,320 - $315,000) / (6,008 - 6,000) = $320 / 8 = $40.00 per acre.

A Farm Co-Op Has Over 6,000 Acres Available to Plant