Using data only on aggregate variable input use and land allocation, this paper suggests a methodology for allocating variable input use among crops and improvement of regional crop budget information. Two approaches for estimation of variable input allocations among production activities are examined. One relies on behavioral rules whereby input allocations follow accepted rules of thumb. The alternative approach is derived from profit maximization where input use responds instantaneously to changes in input and output prices. The behavioral rules dominate instantaneous response to prices in explaining the data analyzed in this paper and suggest the validity of a simple behavioral approach for developing enterprise budgets and cost of production estimates.
Bibliographical noteFunding Information:
This research was partly supported by the Phillip Monaster Institute, Ben Gurion University of the Negev. The research was part of BARD project no. US-116l-86R.
- Behavioral rules
- Enterprise budgets
- Profit maximization
- Variable input allocation