Question
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.
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