If corn yields 150 bushels per acre and sells for $2.00 per bushel with total cost per acre of $300, what soybean price per bushel would yield the same net return per acre if soybeans yield 50 bushels per acre and cost $300 per acre?

If corn yields 150 bushels per acre and sells for $2.00 per bushel with total cost per acre of $300, what soybean price per bushel would yield the same net return per acre if soybeans yield 50 bushels per acre and cost $300 per acre?

• A. $4.00
• B. $5.00
• C. $6.00
• D. $7.00

Answer: (C)

The idea is to equalize net return per acre between the two crops. For corn, revenue is 2.00 dollars per bushel times 150 bushels equals 300 dollars, and the cost is 300 dollars, so the net return per acre is 0. To match that with soybeans, the price per bushel must make the soybean revenue cover the same cost: price × 50 − 300 = 0. Solving gives price × 50 = 300, so price = 6.00 dollars per bushel. Therefore, the soybean price that yields the same net return per acre is $6.00 per bushel. In general, equal net returns occur when price per bushel equals total cost per acre divided by the yield per acre for that crop.

The idea is to equalize net return per acre between the two crops. For corn, revenue is 2.00 dollars per bushel times 150 bushels equals 300 dollars, and the cost is 300 dollars, so the net return per acre is 0. To match that with soybeans, the price per bushel must make the soybean revenue cover the same cost: price × 50 − 300 = 0. Solving gives price × 50 = 300, so price = 6.00 dollars per bushel. Therefore, the soybean price that yields the same net return per acre is $6.00 per bushel. In general, equal net returns occur when price per bushel equals total cost per acre divided by the yield per acre for that crop.