Question

You run a small farm that grows fresh produce to sell at your roadside stand. You employ workers, you rent land and you rent capital in order to grow the produce. If the marginal product per dollar of capital is $2, the marginal product of labor is 20, the price of labor is $10 and the marginal product of land is 32, what is the price of land?

Answer 1

The price of the land is $16

Step-by-step explanation:

Answer 2

The price of land is $16

Step-by-step explanation:

Provided data from the question;

The marginal product per dollar of capital = $2

The marginal product of labor = 20

The price of labor = $10

The marginal product of land = 32

To determine the price of land, The formula below is given:

Marginal Product of Labor ÷ Price of Labor = Marginal Product of Land ÷ Price of Land

20 ÷ $10 = 32 ÷ P

$2 = 32 ÷ P

P = $16

Therefore, Price of land = $16