HANDLING DURABLE AND NONDURABLE FARM INPUT DECISIONS USING A SINGLE THEORETICAL FRAMEWORK

Garnett L. Bradford and Stephen E. Miller

No 18802, Working Papers from Clemson University, Department of Agricultural and Applied Economics

Abstract: Students in economics are taught that the optimal usage of a nundurable input occurs when the value of its marginal product (VMP) equals its marginal cost (MC). However, this fundamental condition has rarely been extended to durable inputs. Even advanced textbooks have done little to compare and contrast the optimality conditions for durables versus nondurables. This paper outlines and compares a common VMP-MC decision for (1) nondurables in a single-period time horizon, (2) durables in a finite planning horizon, and (3) durables in an infinite planning horizon.

Keywords: Agricultural; Finance (search for similar items in EconPapers)
Pages: 14
Date: 1999
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Persistent link: https://EconPapers.repec.org/RePEc:ags:cuaewp:18802

DOI: 10.22004/ag.econ.18802

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