Elasticity of Breakeven Prices Between Agricultural Enterprises

Abstract

The concept of breakeven price elasticity between agricultural enterprises is introduced. The technique is highly flexible and allows for sensitivity analysis of break even prices between enterprises. An application of the approach to corn and soybean production in East Texas indicates that for a fluctuation in the price of soybeans, a lower relative change in the corn price is required for corn production to maintain an equal level of returns above costs.