By M. Buckett (Auth.)
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Additional info for An Introduction to Farm Organisation & Management
1. 1. 2. 3. 2. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. Loss Minimisation 32 32 33 33 33 33 34 35 36 38 40 41 42 43 45 45 47 48 48 3 . 1 . 1. Introduction S o m e people are initially confused by e c o n o m i c principles a n d therefore h a v e little t i m e for t h e m . H o w e v e r , if carefully i n t e r p r e t e d in relation to a given farm situation they c a n p r o v i d e guidelines t o h e l p t h e f a r m e r t a k e decisions necessary for successful, e c o n o m i c p r o d u c t i o n .
H o w e v e r , if each of his scores progressively decline, his overall average falls. M e a n w h i l e his total score for a lifetime keeps o n rising. F r o m Fig. 9 it c a n b e seen t h a t t h e highest total p r o d u c t is at t h e p o i n t w h e r e m a r g i n a l p r o d u c t is zero a n d cuts t h e axis. I Stage I , Stage 2 . Stage 3 Total product Marginal product FIG. 9. Total product, average product, and marginal product. T h e t h r e e stages of p r o d u c t i o n are also s h o w n in Fig.
W h e r e m a r g i n a l cost equals m a r g i n a l r e v e n u e . T h u s t h e average r e v e n u e is greatest at p o i n t 38 An Introduction 60 55 50 to Farm Organisation - and Management y Average B 45 revenue 40 35 30 25 - I \ / 20 Average \. 15 and marginal cost 10 r i i i i 4 I 5 1 6 U n i t s of I 7 I l 1 \ 1 12 input FIG. 11. Profit at point of maximum average return A and profit at point of maximum total profit B. —Assumes that each extra unit of input costs the same as the previous unit.