Question

A farmer has developed a new type of fertilizer. This new fertilizer costs 20 percent more to produce than the old fertilizer but has better results: The same land now produces 25 percent more crops each year. Which statement best describes one way the farm will be affected by using this new fertilizer?

Answer 1

Answer:

The farm’s marginal benefits for each piece of land will increase.

Explanation:

Marginal benefit is the highest output or price that a consumer or production unit can pay or produce. Here, if the total cost of the new fertilizer costs 20 percent more than the old fertilizer but the land can produce 25 percent more crops each year, then it means that the utility of the land has increased.

Moreover, the farmer has more than one piece of land and the total costs of fertilizer for every land has increased only by 20 percent while each land's utility has increased by 25 percent.