Suppose That You Own Two Farms on Which to Grow

question 5

Multiple Choice

Suppose that you own two farms on which to grow corn. In order to lower the cost of production, you determine to increase production on Farm 1 and reduce it on Farm 2. This implies that the marginal cost of production on Farm 1 is:

• A) greater than the marginal cost of production on Farm 2.
• B) less than the marginal cost of production on Farm 2.
• C) equal to the marginal cost of production on Farm 2.
• D) The difference of the marginal costs between the two farms cannot be determined.

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Definitions:

Consent

The voluntary agreement to or approval of what is done or proposed by another; an essential element of contracts.

Scienter

A legal term referring to the knowledge of wrongdoing, especially with intent to deceive or defraud.

Securities Exchange Act

A U.S. federal law regulating the trading of securities, such as stocks and bonds, in order to protect investors from fraudulent practices.

Fraud

A deliberate deception to secure unfair or unlawful gain.