This study is one in which production functions have been derived for a sample of 160-acre farms; a few statistics also are included for 240-acre farms. The elasticities or regression coefficients are acceptable at conventional probability levels for both a crop function and a livestock function.
For crops, marginal returns have the following values for mean use of resources: labor, $78 per month; crop capital, $1.08 per $1 used; machinery expenses, $0.93 per $1 used. For livestock, the marginal returns are: labor, $218 per month; capital expenses, $1.04 per $1 used.
Further tests show that, with the exception of livestock labor, farmers as an average for the sample used for this study are using resources in quantities to maximize profits. Both labor and capital resources were used in amounts so that the added return was equal to the added cost of a unit of resources. Also, the farmers, as an average, evidently had allocated their labor and capital between crop and livestock enterprises in a manner to give the same return on the last unit of labor used for each-a condition necessary for the maximization of profits.
Heady, Earl O.
"Resource productivity and returns on 160·Acre farms in North-Central Iowa (A production function study of marginal returns on farms with fixed plants),"
Research Bulletin (Iowa Agriculture and Home Economics Experiment Station): Vol. 31
, Article 1.
Available at: https://lib.dr.iastate.edu/researchbulletin/vol31/iss412/1