Illustrate what is the total economic cost per acre
1. The Al-Habsi family owns a big farm in Rustaq. Three choices exist for how to use the farm:
a. Grow garlic, where garlic yield would be 70 bags per acre. The price of garlic is RO 3.5 per bag and production costs are RO140 per acre
b. Grow cucumber, where cucumber yield would be 50 bags per acre. The price of cucumber is RO 2.5 per bag and production costs are RO150 per acre
c. Lease/rent out the acres to Mr. Al-Kindi (a neighbor) who will pay RO 80 per acre. With the lease/rent option the Al-Habsi family would still have expenses of RO 35 per acre.
Based on the information above, answer the following questions:
• Which alternative should the Habsi family undertake? Why?
• Given your answer above, what is the Habsi’s opportunity cost per acre?
• What is the total economic cost per acre for your answer?
