A farmer is deciding whether or not to add fertilizer to his or her crops. If the farmer adds 1 pound of fertilizer per acre, the value of the resulting crops rises from $80 to $100 per acre. According to marginal analysis, the farmer should add fertilizer if it costs less than:

Question

Quizplus · Accepted Answer

To determine the cost at which the farmer should add fertilizer, we need to calculate the marginal benefit and the marginal cost.

Marginal benefit = $100 - $80 = $20
Marginal cost = cost of 1 pound of fertilizer

To maximize profit, the farmer must add fertilizer only if the marginal benefit of adding fertilizer is greater than the marginal cost.

Therefore, the farmer should add fertilizer if:

Marginal benefit > Marginal cost
$20 > cost of 1 pound of fertilizer

Solving for the cost of 1 pound of fertilizer:

$20 > cost of 1 pound of fertilizer
$20 - $80 = - $60 > - cost of 1 pound of fertilizer
$60 < cost of 1 pound of fertilizer

So, the farmer should add fertilizer if it costs less than $60 per pound.

Among the given answer choices, the closest value is $20 per pound (Choice B). Therefore, the farmer should add fertilizer if it costs less than $20 per pound.

A Farmer Is Deciding Whether or Not to Add Fertilizer