Question

A purely competitive wheat farmer can sell any wheat he grows for $25 per bushel. His five acres of land show diminishing returns because some are better suited for wheat production than others. The first acre can produce 1,000 bushels of wheat, the second acre 900, the third 800, and so on.

How many bushels will each of the farmer’s five acres produce?

Answer 1

Answer:

4,000 bushels of wheat

Explanation:

Given that,

Selling price per bushel of wheat = $25

His land follows diminishing returns as some are better suited for wheat production than others.

First acre of land produce = 1,000

Second acre of land produce = 900

Third acre of land produce = 800

As the land is following diminishing returns and it can be seen from the above information that there is a reduction of 100 bushel of wheat as we are moving from one acre of land to other acre of land.

Similarly,

Fourth acre of land yield = 700

Fifth acre of land produce = 600

Therefore, the total bushels of wheat produce by each of the farmer’s five acres is calculated as follows:

= First acre of land produce + Second acre of land produce + Third acre of land produce + Fourth acre of land produce + Fifth acre of land produce

= 1,000 + 900 + 800 + 700 + 600

= 4,000 bushels of wheat