2. The output elasticity of fertilizer drops very sharply as well, but fertilizer remains in the production function at a significant level. The results confirm the supposition that “good” management and heavy fertilizer applications go together. It should be noted that since the elasticity of output for fertilizer in the AC function is only about one-third that in the OLS function (equation [1]), the marginal revenue product is reduced correspondingly. The ratio of marginal revenue product to marginal cost for fertilizer was almost 5 in equation (I), a value almost identical to one reported by Griliches for a similar function but different data (1964, pp. 968-69). Elimination of man¬agement bias reduces the ratio to 1.57. This value is still high enough to suggest some disequilibrium in the use of fertilizer, and thus to explain its rapid growth in consumption, but it is not so high as to strain one’s belief in the rationality of American farmers.