Fat Cat Farms Inc. is a small catfish farm. Fat Cat estimates that output would increase by 1800 pounds per month with an additional 2,000 pounds of catfish food provided monthly by a new feeding system. Alternatively, output could be increased by 3,000 pounds per month with an additional 20,000 gallons of fresh water per month. Assuming the cost of water is $.06 per gallon and that fertilizer is $.25 per pound, Fat Cat is using an optimal combination of fish food and water.

Question

Quizplus · Accepted Answer

To determine the optimal combination of fish food and water, we need to compare the Marginal Physical Product (MPP) and Marginal Cost (MC) of each input. Without information about the MC of each input, we cannot confidently determine whether Fat Cat is using an optimal combination.