Question

To produce a pound of candy corn, Brach’s Candy Company, can use either a pound of cane sugar, a pound of beet sugar, or a combination of these two inputs that equals 1 pound.

a. Draw three different isoquants for the production process. Make sure to label your axes and intercepts.

b. Write out an equation for the production function.

c. What is the MRTS (you can pick the order) for this production function? Interpret the meaning of the MRTS.

Answer 1

Answer:

Given that,

To produce a pound of candy corn, Brach’s Candy Company, can use either a pound of cane sugar, a pound of beet sugar, or a combination of these two inputs that equals 1 pound.

(a)  Three different isoquants for the production process:

The isoquants for the product is,

Q=1,2,3.

(b) The equation for the production function:

The equation for the isoquant production function is,

Q= quantity of beet sugar+ quantity of cane sugar

Here, BS=beet sugar and CS= cane sugar

(c) The MRTS for this production function:

The MRTS for this production function is,

MRTS= marginal product of cane sugar / marginal product of beet sugar

MRTS=1 a constant

The meaning of the MRTS:

MRTS: Marginal rate of technical substitution.

Which means that the marginal rate of technical substitution is 1. which means that the factor of product cane sugar and beet sugar can be substitute to each other at constant rate of 1.

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