To Minimize the Total Costs of Production Across Two Farms, Choose Output to Make Marginal Costs Equal
Top panel: If we produce a few bushels fewer on Farm 2 and a few bushels more on Farm 1, costs fall by area A and rise by the smaller area B so total costs fall.
Bottom panel: Therefore, to minimize total production costs, set output on the two farms so that marginal costs are equal.
Top panel: If we produce a few bushels fewer on Farm 2 and a few bushels more on Farm 1, costs fall by area A and rise by the smaller area B so total costs fall.
Bottom panel: Therefore, to minimize total production costs, set output on the two farms so that marginal costs are equal.