HANDLING DURABLE AND NONDURABLE FARM INPUT DECISIONS USING A SINGLE THEORETICAL FRAMEWORK

Students in economics are taught that the optimal usage of a nundurable input occurs when the value of its marginal product (VMP) equals its marginal cost (MC). However, this fundamental condition has rarely been extended to durable inputs. Even advanced textbooks have done little to compare and contrast the optimality conditions for durables versus nondurables. This paper outlines and compares a common VMP-MC decision for (1) nondurables in a single-period time horizon, (2) durables in a finite planning horizon, and (3) durables in an infinite planning horizon.


Issue Date:
1999
Publication Type:
Working or Discussion Paper
PURL Identifier:
http://purl.umn.edu/18802
Total Pages:
14
Series Statement:
Working Paper WP 121799




 Record created 2017-04-01, last modified 2017-04-04

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