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Decision‐making Criteria for Purchasing Milk Quota at the Individual Farm Level: Reply
Author(s) -
Stonehouse D. Peter,
MacGregor Murray A.
Publication year - 1982
Publication title -
canadian journal of agricultural economics/revue canadienne d'agroeconomie
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.505
H-Index - 37
eISSN - 1744-7976
pISSN - 0008-3976
DOI - 10.1111/j.1744-7976.1982.tb01995.x
Subject(s) - economic rent , economics , purchasing , revenue , marginal cost , regret , marginal revenue , microeconomics , total revenue , marginal utility , operations management , mathematics , finance , statistics
Careful perusal of the comment by Barichello suggests that there are no substantive criticisms of the issues raised in our original paper. At the same time, it is apparent that there is some misinterpretation of the models that we used, and of the assumptions underlying the models. For example, the optimality criterion that marginal cost equals marginal revenue in the earlier models is important in determining whether profits in the enterprise can be increased or decreased. However, the difference between average total costs and average revenue is important in determining the levels of profits and hence the potential rents involved.