Reference no: EM13997477
1. An agribusiness firm may undertake three alternatives:
A. by cane sugar and manufacture various sugars and sweets, making a profit of $10million;
B. by wheat and produce bread, rolls, and pasties, making a profit of $15 million; or
C. by corn and produce Tex-Mex foods, making a profit of $12 million.
a. Which alternative should this agribusiness firm undertake? Why?
b. The opportunity cost associated with the three choices is $ _______ million.
2. The Stinson family owns a farm in Amarillo, Texas. Three alternatives for how to use the farm:
a. Growth wheat. Wheat yield would be 70 bushels per acre. The price of wheat is $ 3.50 /bu and production expenses are $ 140 /ac.
b. Growth barley. Barely yield would be 50 bushels per acre. The price of barely is $ 2.50 /bu and production expenses are $ 150 / ac.
c. Lease out the acres. The Stinson’s neighbour, Auld McDonald, will pay $ 80/ac for leasing, but the Stinson’s would still have expenses of $ 35/ac.
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