Question

The Stinson family owns a farm. Three alternatives exist for how to use the farm: a) Grow wheat. Wheat yield would be 70 bu/acre. The price of wheat is $3.50/bu and production expenses are $140/acre b) Grow Barley. Barley yield would be 50 bu/acre. The price of barley is $2.50/bu and production expenses are $150/acre c) Lease out the acres. the Neighbor will bay $80/acre but they will still have expenses of $35/acre.

Answer 1

Answer:

Following are the solution to the given questions:

Explanation:

Please find the complete question in the attached file.

In this question, the Stinsons would prefer the most profitable alternative  

Formula:

$Profit = Income - Costs = (price \times amount) - Costs \ of \ production$

In point A:

$\to Profit = (70 \times \ 3.5) - \ 140$

              $= \ 245 - \ 140\\\\ = \ 105 \ / \ acre$

In point B:

$\to Profit = (50 \times \ 2.5) - \ 150$

              $= \ 125 - \ 150\\\\ = - \ 25 \ / \ acre \ (Loss)$

In point C:

$\to Profit = \ 80 - \ 35=\ 45 \ / \ acre$