Figure: Two Farms Refer to the figure. If a farmer owns two farms, Farm 1 and Farm 2, and is under contract to produce 400 bushels of corn for a food processor, should the farmer produce 200 bushels of corn from each farm as shown in this diagram?
A) Yes, splitting production evenly between farms, or factories, is the method to minimize the costs of production.
B) No, he should produce all 400 bushels from Farm 2, the low-cost farm.
C) No, he should produce more corn from Farm 1 and less corn from Farm 2 so that the marginal cost of the last bushel of corn is equal across both farms.
D) No, he should produce less corn from Farm 1 and more corn from Farm 2 so that the marginal cost of the last bushel of corn is equal across both farms.

Question

Figure: Two Farms  Refer to the figure. If a farmer owns two farms, Farm 1 and Farm 2, and is under contract to produce 400 bushels of corn for a food processor, should the farmer produce 200 bushels of corn from each farm as shown in this diagram?
A) Yes, splitting production evenly between farms, or factories, is the method to minimize the costs of production. 
B) No, he should produce all 400 bushels from Farm 2, the low-cost farm. 
C) No, he should produce more corn from Farm 1 and less corn from Farm 2 so that the marginal cost of the last bushel of corn is equal across both farms. 
D) No, he should produce less corn from Farm 1 and more corn from Farm 2 so that the marginal cost of the last bushel of corn is equal across both farms.

Quizplus · Accepted Answer

The Answer of Figure: Two Farms  Refer to the figure. If a farmer owns two farms, Farm 1 and Farm 2, and is under contract to produce 400 bushels of corn for a food processor, should the farmer produce 200 bushels of corn from each farm as shown in this diagram?
A) Yes, splitting production evenly between farms, or factories, is the method to minimize the costs of production. 
B) No, he should produce all 400 bushels from Farm 2, the low-cost farm. 
C) No, he should produce more corn from Farm 1 and less corn from Farm 2 so that the marginal cost of the last bushel of corn is equal across both farms. 
D) No, he should produce less corn from Farm 1 and more corn from Farm 2 so that the marginal cost of the last bushel of corn is equal across both farms.

Figure: Two Farms Refer to the Figure