Estimation of a Long-Run Cost Function for Bananas Cultivation in Jordan

Abstract

This study aimed at investigating bananas production in Jordan in terms of estimating the long run cost function and deriving the associated parameters. A field survey was carried out to collect the primary data in Ghore Area of Jordan (Jordan Valley). Simple random and purposive sampling procedure was followed in this study. Interviews were carried out and a questionnaire was constructed to collect the needed information from 66 sampled farmers. The findings of the study showed that both the long run marginal costs and long run average costs were estimated to be 0.05 and 0.13 JDs/kg of bananas respectively. The optimum size of production and the production level with maximum profit for the sampled farms were 8695.65 kgs 13043 kgs respectively. Both the optimum size of production and the production level with maximum profit of the sampled farms were much higher of the average production of these farms by 2260 and 3997 JDs respectively. The sampled farmers have a chance to increase their profits by adopting practices to decrease their long run production costs or by achieving cost efficiency.