Consider four parcels of peanut growing land.The nonland peanut production costs are $1,000 for Parcel A, $1,200 for Parcel B, $1,600 for Parcel C, and $1,700 for Parcel D.If, before rents are charged, farmers are indifferent between planting on Parcel, then which of the following is true?

Question

Quizplus · Accepted Answer

If farmers are indifferent between parcels before rents are charged, it means the total costs (nonland costs plus rent) of producing peanuts on each parcel must be equal. Since Parcel D has the highest nonland production cost ($1,700) and if its rent is $0, then for farmers to be indifferent, the total cost of producing on each of the other parcels must also come to $1,700. This means Parcel A's rent must be $700 ($1,700 total cost - $1,000 nonland cost), not $600 as stated. However, given the options provided and the principle that the total costs must be equal for indifference, option D is the closest to a logical explanation, assuming a typo in the rent amount for Parcel A. The correct interpretation should consider the principle of equalizing total costs across parcels for farmer indifference, which suggests a mistake in the provided choices.

Consider Four Parcels of Peanut Growing Land