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When administered according to a careful feeding schedule, a premium nutritional additive called Supercowchow increases milk production earnings in a dairy herd to $1,050,000 from
When administered according to a careful feeding schedule, a premium nutritional additive called Supercowchow increases milk production earnings in a dairy herd to $1,050,000 from the $1,000,000 using the standard Cowchow that costs $50 a sack for the farmer to buy. The farmer uses 1,000 sacks of Cowchow a year. Supercowchow costs $10 per sack extra to manufacture and the farmer would use 1,000 sacks of it. Thus the added-value of Supercowchow over regular Cowchow is $50,000/1,000 sacks, which is $50 per sack. Which of the following would be the farmers highest acceptable price for the new Supercowchow per sack? a. $60 b. $70 c. $80 d. $90 e. $100
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