Question

A farmer has developed a new type of fertilizer. This new fertilizer costs 20

percent more to produce than the old fertilizer but has better results: The
same land now produces 25 percent more crops each year.
Which statement best describes one way the farm will be affected by using
this new fertilizer?
OA. The farm's marginal cost for fertilizer will increase.
OB. The farm's opportunity cost for using fertilizer will increase.
OC. The farm's opportunity cost for using fertilizer will decrease.
OD. The farm's marginal cost for fertilizer will decrease.

Answer 1

Step-by-step explanation:

The correct answer is OD. The farm's marginal cost for fertilizer will decrease.

This is because even though the new fertilizer costs 20% more to produce, its better results lead to a 25% increase in crop production. This means that the cost of producing each additional unit of crop is now lower due to the improved fertilizer. As a result, the marginal cost of using the new fertilizer will be lower than the marginal cost of using the old fertilizer.