Explanation should include
- a definition of the law of diminishing returns
- the effect of additional units of input on output
- the importance of break-even analysis
- considerations related to aspects such as
- human capital
- equipment costs
- land costs
- capital investment
- recordkeeping (data).
Process/Skill Questions:
- What is a break-even analysis, and how is it applied in agricultural production?
- What is the law of diminishing returns?
- What should the relationship be between marginal cost and marginal revenue in order to maximize profit?
- How does data inform the agricultural producer’s decision-making?