Suppose pigs (P)can be fed corn-based feed (C)or soybean-based feed (S)such that the production function is P = 2C + 5S.If the price of corn feed is $2 and the price of soybean feed is $5,what is the cost-minimizing feed combination producing P = 100?
A)C = 50
B)S = 20
C)C = 25,S = 10
D)All points on the P = 100 isoquant,including those listed in a-c would cost the same.

Question

Quizplus · Accepted Answer

Given the production function P = 2C + 5S and the goal to produce P = 100, the cost-minimization problem involves finding the combination of C and S that minimizes cost while producing the required amount of output. The cost of using corn-based feed (C) is $2 per unit, and the cost of using soybean-based feed (S) is $5 per unit. The statement that all points on the P = 100 isoquant, including those listed in options A, B, and C, would cost the same, implies that any combination of C and S that satisfies the production function P = 100 will have the same total cost. This is because the production function and the prices of inputs are linear, leading to a situation where the isoquant for P = 100 is a straight line, and the isocost lines are also straight and parallel to the isoquant, indicating that multiple combinations of C and S can produce 100 units of P at the same total cost.

Suppose Pigs (P)can Be Fed Corn-Based Feed (C)or Soybean-Based Feed