Fertilizer should be applied as long as what condition holds?

Fertilizer should be applied as long as what condition holds?

• A. Value of increased production > added cost
• B. Added cost > value of increased production
• C. Price level declines
• D. Fertilizer cost is zero

Answer: (A)

The main concept is marginal analysis: you apply fertilizer as long as the benefit from one more unit of fertilizer exceeds its cost. In farming terms, this means comparing the value of the increased production (the extra revenue you get from the additional yield, i.e., price times the extra quantity) with the added cost of applying that fertilizer. If the value of the extra production is greater than the added cost, applying more fertilizer increases profit, so you keep applying. If the added cost would exceed the value of the extra output, applying more would reduce profit, so you stop. At the point where they’re equal, you’re at the profit-maximizing level given the options. So the correct idea is to apply as long as the value of the increased production exceeds the added cost.

The main concept is marginal analysis: you apply fertilizer as long as the benefit from one more unit of fertilizer exceeds its cost. In farming terms, this means comparing the value of the increased production (the extra revenue you get from the additional yield, i.e., price times the extra quantity) with the added cost of applying that fertilizer. If the value of the extra production is greater than the added cost, applying more fertilizer increases profit, so you keep applying. If the added cost would exceed the value of the extra output, applying more would reduce profit, so you stop. At the point where they’re equal, you’re at the profit-maximizing level given the options.

So the correct idea is to apply as long as the value of the increased production exceeds the added cost.