EEONOMIC ANALYSIS OF THE RESPONSE OF WHEAT TO DIFFERENT LEVELS OF CHEMICAL FERTILIZERS

This study aims at estimating the optimum amount of nitrogen and phosphorus fertilizers for wheat production in the environment and economic condition similar to experiment region. Seven production functions were estimated ; Linear , Cobb-Douglas , semi logarithmic , quadratic , quadratic with interaction term , square root , square root with interaction term. The results showed that the quadratic function was the most representative according to statistically economical , econometrical and biological criteria. As the coefficient of determination was 85% . The results also showed the absence of the model from autocorrelation as Durbbin-Watson value was less than zero this means the correlation between residual is weak. Also the results also showed the absence of heteroscedasticity according to residual analysis as it does not take a definite shape. Also results showed the absence of multicallinearity according to correlation matrix for independent variables. The results had shown that the optimum amount of nitrogen fertilizer was (37.7) kgs. while the optimum amount of phosphorus was (22.3) kgs. In addition some derivatives from production function were derived such as marginal rate of substitution , isoquant equation , expansion path , isoclines , and ridge lines . the results also showed that the signs of independent variables were consistent with economic logic. The nature of the quadratic function is consistent with biological criteria as the addition of fertilizer would be biologically viable to a certain limit.