Please explain calculations (so I can understand step by step) and attach excel document with graphs.

1.Compute and graph the total product curve (per cow) and the marginal product curve for nutrients based on the numbers in Table 1. Use two separate graphs, one for the total product curve and one of the marginal products. At what quantity of nutrients does diminishing returns begin to occur?

2.Calculate the actual cost values (fixed, variable, and total) for each of the six feed levels in Table 1. Do the approximations in Table 3 seem to represent them faithfully? Consider units carefully, remembering that the farm in question has 25 cows and that each cow consumes 3,000 pounds of feed for free by grazing. To demonstrate your answer, create a graph with the total cost as you derived from Tables 1 and 2 as well as the total cost as provided by Table 3. From this, you should be able to evaluate how closely the results match.

3 Using the data from Table 3, create a table with the marginal cost, average total cost, and average variable cost. Using this table, create two graphs: one with the total cost curve and one with the marginal and average total and average variable costs. Remember that cost curves relate costs to output, not input, so you need output or the change in output in the denominator of your calculations and the level of output on the horizontal axis.

Please read to answer questions:

In some types of agriculture, experimental studies have been made that show short-run cost patterns quite precisely. One of the most extensive of these was in dairying. Several hundred cows at 10 experimental stations in a number of states were fed at various levels for three years and their milk production compared."

"The feed 'inputs' that went with the various milk outputs are shown in [Table 1]. A cow requires a certain amount of feed simply to maintain herself. Beyond that, more feed leads to more milk, but at a decreasing rate. The cows fed at high levels produced more than less generously treated cows, but, as we would expect, milk output did not increase as fast as feed consumption."

Table 1.

Number of Cows in Each Group Average (Per Cow) Total Digestible Average (per cow) 4% Fat Corrected Milk Produced

Nutrients Consumed (lbs per year) lbs per year)

65 5,654 7,626

60 6,117 8,184

66 6,575 8,824

55 7,132 9,400

52 7,531 9,780

94 7,899 9,965

"These production figures can be used to estimate the costs of a hypothetical dairy farm. Imagine a 25-cow farm near one of the large cities on the eastern seaboard. Let it produce enough hay, silage, and pasture to provide 3,000 pounds of feed per cow per year [at zero cost]. For simplicity, assume that purchased feed [that is, above the 3,000 pounds the cows get from foraging] is the only variable cost. The farm might have the following fixed costs per year:

Table 2

Depreciation and Maintenance of Buildings $4,800

and Equipment

Property Taxes $2,400

Miscellanous

(Seed, Fertilizer, Gas, Vet, Marketing) $7,800

Labor (3,300 Hours at $6.00) $19,800

Interest (5% on $144,000) $7,200

Total $42,000

"Labor is treated as a fixed cost because the operator and his family do all the work. In many non-farm businesses, labor is the leading variable cost, but in American agriculture, three quarters of the labor is supplied by the farmers and their families. This sort of labor will be employed no matter what the farm produces. A farmer can hardly fire his wife if he has a bad year." [Note: The divorce rate was much lower in the 1960s. Is this still true?]

"The only way to put a value on this family labor is by looking at its opportunity cost, that is, what it can earn in its best alternative employment. In 1964, hired farm labor was paid about [$6.00] an hour on average. The farmer undoubtedly could earn more than this in the city, but for most American farmers, a dollar on the farm is worth more than one in the city."

We can calculate cost figures for this farm based on the production data in Table 1 and the assumption that "total digestible nutrients" cost $0.24 per pound. Applying this feed cost to each of the 25 cows on our hypothetical farm for the six feed levels shown in Table 1 and adding in fixed costs from Table 2, we get the approximate relationship shown in Table 3 between milk output and fixed and variable costs.

Table 3

Total Output Total Fixed Costs Total Variable Costs Total Costs

(1000s of pounds (dollars per year) (dollars per year) (dollars per year)

of milk per year)

0 42,000 0 42,000

200 42,000 18,000 60,000

210 42,000 19,500 61,500

220 42,000 21,300 63,300

230 42,000 23,400 65,400

240 42,000 26,100 68,100

250 42,000 30,000 72,000

260 42,000 36,000 78,000

This analysis has assumed a farm size of 25 cows; however, there may be important differences in costs associated with having farms that are smaller or larger than this. The 1960s were a period of transition for the agriculture sector of the U.S. economy. Average farm size was getting larger, with automation of farm processes causing small family operations to be merged into larger enterprises. Because the transition to large farms was just beginning, there was a wide distribution of farm sizes, and it was easy to observe the costs of small and large farms side by side.