A farmer can buy either corn or barley for her cows. Assume that both types of...

A farmer can buy either corn or barley for her cows. Assume that both types of feed are equally nutritious. Draw one of the farmer’s isoquants on a graph and show that, depending on the relative costs of barley and corn, it is sometimes cost-minimizing for the farmer to only buy corn, and sometimes only barley.

Solutions

Expert Solution

Farmer's Isoquants on Graph

ISOQUANT SCHEDULE

Combinations	Corn	Barley
A	100	0
B	60	20
C	40	30
D	0	100

The above table shows the different combinations of corns and barley that can be purchased for cows.

A combination shows when farmer buy only corn to minimise cost.
at B combination, farmer buy 60 units of corn and 20 units of barley
at C combination, he buy 40 units of corn and 30 units of barley
D combination shows when farmer decides to buy only barley to minimise cost.

ISOQUANT CURVE :-

Corns are represented on Y axis and Barley on X axis.
ABCD is the isoquant curve.

Rahul Sunny answered 2 years ago

Next > < Previous

Related Solutions

Assume you are a corn farmer who anticipates harvesting and selling about 100,000 bushels or Corn...

Assume you are a corn farmer who anticipates harvesting and selling about 100,000 bushels or Corn in the autumn. Assume you think that prices are currently high, $2.40 per bushel, and you want to hedge yourself. Discuss two possible hedging strategies :(1) based on futures / forwards, and(2) based on options. Assume that the relevant positions have contract prices or exercise prices of $2.50 per bushel. The price of the option is $ 0.12(12 cents) per bushel. Indicate how your...

(a) Farmer Sherry can grow wheat and barley. She can grow 75 bushels of wheat or...

(a) Farmer Sherry can grow wheat and barley. She can grow 75 bushels of wheat or 125 bushels of barley on a hectare of her land for the same cost. The price of wheat is $2 per bushel and the price of barley is $0.80 per kilogram. Show the benefits to Sherry of specialization. What should she specialize in? Why ? (2) (b) You work at your school, making $15 per hour. Yesterday, you decided to cancel your two- hour...

(a) Farmer Sherry can grow wheat and barley. She can grow 75 bushels of wheat or...

(a) Farmer Sherry can grow wheat and barley. She can grow 75 bushels of wheat or 125 bushels of barley on a hectare of her land for the same cost. The price of wheat is $2 per bushel and the price of barley is $0.80 per kilogram. Show the benefits to Sherry of specialization. What should she specialize in? Why ? (2) (b) You work as a teacher at your school, making $15 per hour. Yesterday, you decided to cancel...

A farmer can buy two types of plant food, mix A and mix B. Each cubic...

A farmer can buy two types of plant food, mix A and mix B. Each cubic yard of mix A contains 20 pounds of phosphoric acid, 30 pounds of nitrogen, and 5 pounds of potash. Each cubic yard of mix B contains 10 pounds of phosphoric acid, 30 pounds of nitrogen, and 10 pounds of potash. The minimum monthly requirements are 460 pounds of phosphoric acid, 960 pounds of nitrogen, and 220 pounds of potash. If mix A costs $30...

A farmer can buy two types of plant food, mix A and mix B. Each cubic...

Two farmers produce corn on adjacent plots of land. Farmer 1 uses groundwater to irrigate her...

Two farmers produce corn on adjacent plots of land. Farmer 1 uses groundwater to irrigate her crop while farmer 2 uses surface water. When farmer 1 utilizes groundwater, she imposes an external cost on farmer 2, since groundwater use leads to depletion of the surface water that is available to farmer 2. In particular, the profit function for farmer 1 is ∏1 = 8z - 1/2z^2. While the corn production function for farmer 2 is ∏2 = 10x - x^2 -...

4. A consumer can buy either Food or Luxuries. Assume the consumer has wellbehaved preferences. The...

4. A consumer can buy either Food or Luxuries. Assume the consumer has wellbehaved preferences. The government is considering providing an in-kind transfer of Food. (For example, the government could issue a debit card that can only be used to buy Food up to a certain dollar value.) Show that the consumer: cannot be worse off from the in-kind transfer; and that the consumer might be better off with a transfer of money of equal value than with the in-kind...

A farmer has 1000 acre of land on which he can grow corn, wheat and soyabeans....

A farmer has 1000 acre of land on which he can grow corn, wheat and soyabeans. Each acre of corn cost Rs. 100 for preparation, requires 7 man days of work and yields a profit of Rs. 30. An acre of wheat cost Rs. 120 for preparation, requires 10 man days of work and yields a profit of Rs. 40. An acre of soyabeans cost Rs. 70 to prepare, requires 8 man days of work and yields a profit of...

Company Ginko’s can either buy or lease a printer. If thecompany chooses to buy, the...

Company Ginko’s can either buy or lease a printer. If the company chooses to buy, the printer costs $250 upfront with varying annual maintenance cost as shown below. The printer will last 3 years. Alternatively, the company can sign a 5-year lease to rent a printer for an annual cost of $180. The company’s cost of capital is 10%.(i) What is the EAC (equivalent annual cost) for buying a printer? (ii) Which option (buy or lease) is better? Show your...

A farmer is considering the purchase of a sprinkler system. He can choose to buy system...

A farmer is considering the purchase of a sprinkler system. He can choose to buy system A or system B. Sprinkler A and B provide the same service so revenues can be ignored. The sprinkler system A costs $37,000, has a before-tax net return of -$5,900, has a life of 7 years, and a terminal value of $12,600. Sprinkler system B costs $24,500, has a before-tax net return of -$7,000, has a life of 6 years, and a terminal value...

Subjects