A farmer has 1,000 acres on which he has previously grown corn.His yield per acre is 100 bushels of corn.If the corn payment rate is $0.43 a bushel,his production flexibility contract payment equals

Question

Quizplus · Accepted Answer

First, calculate the total production of corn:

1000 acres x 100 bushels per acre = 100,000 bushels

Then, multiply the total production by the payment rate per bushel:

100,000 bushels x $0.43/bushel = $43,000

However, this is not the production flexibility contract payment. The production flexibility contract payment is calculated by taking 80% of the payment rate per bushel multiplied by the total production:

$0.43/bushel x 80% = $0.344/bushel

$0.344/bushel x 100,000 bushels = $34,400

Therefore, the production flexibility contract payment is $36,550 (the original payment rate minus 80% of the payment rate, multiplied by the total production).

A Farmer Has 1,000 Acres on Which He Has Previously