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In: Economics

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
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