Consider two farms. Farm 1 produces unlimited bushels for a cost of $5 each. Farm 2 produces unlimited bushels for a cost of $7 each. How should production be allocated between these two farms?
A) Produce 7 bushels on Farm 1 for every 5 bushels on Farm 2.
B) Produce 5 bushels on Farm 1 for every 7 bushels on Farm 2.
C) Produce all bushels on Farm 1.
D) Produce all bushels on Farm 2.

Question

Quizplus · Accepted Answer

Farm 1 has a lower production cost per bushel ($5) compared to Farm 2 ($7), so all production should be allocated to Farm 1 to minimize costs.

Consider Two Farms