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Suppose that you are the consultant to an agricultural cooperative that is deciding whether members should cut their production of cotton in half next year.

The cooperative wants your advice as to whether this action will increase members" revenues. Knowing that cotton (C) and watermelons (W) both compete for agricultural land in the South, you estimate the demand for cotton to be C = 3.5 - 1.0P c + 0.25P w + 0.501, where Pc is the price of cotton, Pw the price of watermelon, and I income.

Should you support or oppose the plan? Is there any additional information that would help you to provide a definitive answer?

Microeconomics, Economics

  • Category:- Microeconomics
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