AGRICULTURAL ECONOMICS 422

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AGRICULTURAL ECONOMICS 422

• Land Economics
• Section 10

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LAND RENT - OUTPUT APPROACH
DOLLARS
mc
ac
QUANTITY
3
BARLOWS PROPORTIONALITY
QUANTITY
Law of Diminishing Returns
TPP
INPUT
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LAND RENT - OUTPUT APPROACH
DOLLARS
mc
mc mr
p
mr ar
ac
QUANTITY
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LAND RENT - OUTPUT APPROACH
DOLLARS
mc
mc mr
RENT
p
mr ar
ac
QUANTITY
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ASSUMES

• Perfect Mobility (no transportation costs)
• Perfectly Elastic Supply of Inputs (no market
  power)

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EQUIMARGINAL PRINCIPLE

• Each Input Maximizing Profit
• MVP at Least Equal to Next Best Alternative
  (Opportunity Cost)