A "Cookbook" Approach for Determining the "Point of Maximum Economic Return" (SSMG 39)

SSMG-39 (P.E. Gaspar, C.G. Carlson, and D.E. Clay)

A ‘Cookbook’ Approach for Determining the ‘Point of Maximum Economic Return’

Summary:

Many agronomists and producers have been conducting on-farm experiments that are designed to determine the impact of different fertilizer rates or plant populations on crop yields. These data are usually analyzed by plotting the input (fertilizer or population rate) vs. output (yield). The point of maximum yield may be picked directly off the plot. To make the results of these experiments more useful, the point of maximum economic return should be calculated. The point of optimum economic return is determined by:

Conducting a yield response experiment;
Converting the yield response data to a functional relationship, output_{corn yield}= f(input levels);
Knowing or estimating the costs of your inputs and outputs; and
Using calculus to determine where the change in the value of the input equals the change in the value of the output.

The goal of this Guideline is to provide an easy-to-follow approach for calculating the point of maximum economic return.