Application of Profit Maximization Concept and Decision Making in Pricing and Output by Farmers in Selected Communities ofDelta State, Nigeria

Abstract

This study examined the application of profit maximization concept in pricing and output of agricultural crops in three studied areas of Agbor, Abraka and Ozoro within Delta State. Each study area is stratified into four (4) zones/neighborhoods, and each zone has 100 administered questionnaires: totaling four hundred (400) questionnaires in each study zone hence, the aggregate of 1200 questionnaires. This was administered to farmers learned enough to respond to questionnaire and those that cannot respond were guided by the researcher. Descriptive statistical method of averages and graphs were employed to illustrate the data collected. It was discovered that the best optimum production and maximization profit level for a farmer is where marginal cost is equal to marginal revenue (MC = MR). This should be the best choosing output and profit maximization level for the farmers. It was discovered that farmers output depended on the size of farm holdings, rate of output and income generated. It was therefore recommended for the purpose of sustenance of income by the farmers in the agricultural business. In order to avoid fluctuations in pricing and output that usually hinder growth and development, farmers are expected to maintain a state of equilibrium both in the short and long run where marginal cost will be equal to marginal revenue. To obtain excess profit margin, the marginal revenue should exceed marginal cost.