Chapter 7, Economics of Input and Product Substitution Video Solutions, Introduction to agricultural economics

Problem 1

A firm uses corn and protein supplement to mix a particular type of hog feed. Corn costs $$\$ 0.08$$ per pound and protein supplement costs $$\$ 0.12$$ per pound. Let's assume the firm has $$\$ 3,000$$ on these two inputs. Plot the iso-cost line suggested by this information in the following graph. What is the value of this curve's slope?
Figure can't copy.

Brittany Stefanilo

Numerade Educator

Problem 2

Suppose the wage rate for labor is $$\$ 20$$ an hour and the rental rate for capital is $$\$ 50$$ per hour. Based on this information, please answer the questions appearing below the graph.
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a. Draw the iso-cost line associated with an hourly budget of $$\$ 1,000$$.
b. What is the least-cost level of capital and labor this business should utilize when packaging 1,000 cases of fruit juice? How did you arrive at this answer?
c. How much does it cost this business to package 1,000 cases of fruit juice? If the firm can sell the juice for $$\$ 50$$ per case, what is its accounting profit?

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03:16

Problem 3

In each of the following four graphs, describe what caused the iso-cost line to change in each box and the nature of the change on each line.
Figure can't copy.

Regina Hays

Numerade Educator

12:18

Problem 4

Given the following graph, briefly respond to the questions appearing directly below this graph.
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a. For an output level of 40 units, calculate the marginal rate of technical substitution between points $A$ and $B$.
b. Also for an output level of 40 units, calculate the marginal rate of technical substitution between points $D$ and $E$.

Sinisa Stura

Numerade Educator

01:04

Problem 5

Given the following graph for two products, respond to the questions below:
a. Calculate the marginal rate of product transformation between points $A$ and $B$.
b. Calculate the marginal rate of product transformation between points $C$ and $D$.
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Carson Merrill

Numerade Educator

02:14

Problem 6

In each of the following four graphs, describe what caused the iso-revenue line to change in each box and the nature of the change on each line. Figure can't copy.

Linh Vu

Numerade Educator

02:42

Problem 7

Given the graph below, fill in the following blanks:
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a. Lines $D E, F G$, and $H I$ are known as___________.
b. The least-cost quantity of labor to use to produce 10 units of output is ___________.
c. The least-cost quantity of capital to use to produce 20 units of output is___________.
d. The curves labeled Output $=10$ and Output $=$ 20 are known as ___________.

Zach Steedman

Numerade Educator

03:15

Problem 8

Given the graph below, fill in the following blanks:
Figure can't copy.
a. If the rental rate of capital is $$\$ 100$$ an hour and the hourly wage rate is $$\$ 10$$, what is the value of the iso-cost line? $$\$ $$___________
b. If the firm can sell the production associated with this least-cost combination of inputs at $$\$ 30$$ per unit, the firm's total profit would be equal to $\$$ $$__________
c. In the graph to the right, what is the least-cost combination of labor and capital if the rental rate of capital doubled? Show all changes to the iso-cost line and the new levels of capital and labor.

Oluwadamilola Ameobi

Numerade Educator

Problem 9

The firm's marginal rate of technical substitution shows
a. the slope of the indifference curve.
b. the slope of the isoquant curve.
c. the slope of the iso-revenue curve.
d. the slope of the budget constraint.

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04:08

Problem 10

The point of tangency between the iso-cost curve and the isoquant indicates
a. how much of two inputs a firm should use.
b. how much profit a firm can make using these rwo inpurs.
c. the minimum cost of using these two inputs for a given level of output.
d. none of the above.

Dwijendra Rao

Numerade Educator

Problem 11

In the short run, all the resources that may be used by the firm are considered variable. $\mathrm{T} \quad \mathrm{F}$

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03:40

Problem 12

The doubling of a firm's feedlor capacity which results in a doubling of production is characteristic of increasing returns to scale. $\mathrm{T} \quad \mathrm{F}$