Philo t farmsworth is a corn farmer with a 40 acre tract of...

Philo T. Farmsworth is a corn farmer with a 40-acre tract of land. Each acre can produce 100 bushels of corn. The cost of planting the full tract of corn is $20,000 and the cost of harvesting the corn is $10,000. a. In May, the price of corn is $10 per bushel and Philo plants his crop. How much will he make if he plants all 40 acres and sells at this price? b. By the time of the harvest, in September, the price of corn has fallen to $2 per bushel. How much will Philo make if he harvests the crop and sells at this price? c. Alternatively, if Philo does not harvest the crop, what will be his loss? Should Philo harvest?

Transcript

00:01 We are given a scenario of the corn farmer, apparently a philo, who really has to work around what they need to do.

00:12 Because the information given is that the piece of land that is available for farming is a 40 acre piece of land and on it, 100 partials of corn can be produced.

00:32 Per each acre okay and obviously what is the costs involved the costs involved include firstly is the planting in the planting is $20 ,000 and what also is involved is their harvesting and the harvesting is $10 ,000 okay so what is generally means is the total cost of production, the total cost of production is actually $30 ,000 to actually complete producing on that piece of land.

01:25 Okay, so the other information that is given is that the selling price would be $10 per basho.

01:36 Okay.

01:39 In may, that is.

01:40 Okay, so this is happening in may and there's, and there's, the farmer decides to proceed with operations.

01:48 Right.

01:49 So what it would mean if the harvesting had happened in may, how much would have been received? it will simply be the 40 times the 100 partials that are produced within that 40 acrespace multiplied by the rate per basal.

02:15 So you actually end up having $40 ,000.

02:22 If this was the scenario that was maintained throughout the year where the selling price would be $10.

02:29 But it's not quite the same.

02:32 Come september, the situation is different.

02:35 Because here in may, you would notice that the profit that philo would make would simply be $40 ,000 less $30 ,000 ,000.

02:46 To get a profit of $10 ,000.

02:52 But in may, the selling price now is $2 a partial.

03:01 Now, the question is, what should feel or do? because if the, what they actually likely, if they sell at $2 in september, the income is going to be, let's look at the revenue first.

03:18 The revenue is obviously now going to be 40 acres times the 100 partials produced per acre times two to give us $8 ,000.

03:34 Okay, so obviously the profit is a negative because we now have revenue minus costs...

Question

Please give Ace some feedback