The table below shows the marginal benefit for various inputs. Assume that each level represents a $100 investment, and answer the following questions. (a) If you have an unlimited budget, how much would you spend on each input? Explain. (b) Now, assume you can spend a maximimum of $500. What would you spend on each input now? What order would you buy them in? (c) Finally, assume you can borrow as much as you want with an interest rate of 10%. How much will you borrow and how will you spend it if you have to pay back the loan within 1 year?
The table below shows the marginal benefit for various inputs. Assume that each level represents a $100 investment, and answer the following questions. (a) If you have an unlimited budget, how much would you spend on each input? Explain. (b) Now, assume you can spend a maximimum of $500. What would you spend on each input now? What order would you buy them in? (c) Finally, assume you can borrow as much as you want with an interest rate of 10%. How much will you borrow and how will you spend it if you have to pay back the loan within 1 year?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
The table below shows the marginal benefit for various inputs. Assume that each level represents a $100 investment, and answer the following questions.
(a) If you have an unlimited budget, how much would you spend on each input? Explain.
(b) Now, assume you can spend a maximimum of $500. What would you spend on each input
now? What order would you buy them in?
(c) Finally, assume you can borrow as much as you want with an interest rate of 10%. How much
will you borrow and how will you spend it if you have to pay back the loan within 1 year?
Transcribed Image Text:Level Seed
1
800
2
650
3 400
23 2018
4 150
5
6
7
100
50
25
10
Fertilizer Fuel Feed
800
400
600
350
300
300
150
250
75
200 38
150
19
50
9
15
5
700
650
200
75
45
0
-25
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