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A farmer has a given amount of land, denoted by L, and can allocate it between two crops. Li, i=1,2, is the amount of
A farmer has a given amount of land, denoted by L, and can allocate it between two crops. Li, i=1,2, is the amount of land allocated to crop i.Each crop is sold on a competitive market at a given price. The production functions for the crops are given y=L", ajE(0,1), i=1,2 where y; is output of crop i. For simplicity, we assume that the required amounts of labour, fertilizer, and so on, are fixed quantities per unit of land and so need not be chosen separately. The net profit per unit of output, price minus variable costs (assume also constant per unit of output) is denoted by ri, i=1,2. Finally we assume that the land has no alternative use or market: it will be used for growing these two crops or not at all. If the farmer wants to maximise his net income (max ry+ray2), he must solve the preoblem in terms of land allocations.
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