Question
suppose that an agricultural household produces (and consumes)corn and potato.This household canbuy and sell in the market its production.the current price of potato is $6/pound
suppose that an agricultural household produces (and consumes)corn and potato.This household canbuy and sell in the market its production.the current price of potato is $6/pound and the current price of corn is $3/pound. If the household is operating in a point of their PPF where the marginal rate of transformation is 1.5 (reducing the production of potato by 1 pound increases the production of corn by 1.5 pounds) what should the household do to maximize their profits?
a. nothing, the household is already in the optimal production bundle
b. we can not determine it. we need more information
c. increase the production of corn
d. increase the production of potato
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