Remember T-bone Pickens, the corporate raider? Now hes concerned about his chicken farms, Pickenss Chickens. He feeds
Question:
(a) Graph these three input combinations and isocost lines in the following diagram.
(b) How much money did Pickens’ managers spend per coop of chickens when the prices were (10, 10)? ______. When the prices were (10, 20)? ______. When the prices were (20, 10)? ______.
(c) Is there any evidence that Pickens’s managers were not minimizing costs? Why or why not? (d) Pickens wonders whether there are any prices of corn and soybeans at which his managers will use 150 bushels of corn and 50 bushels of soybeans to produce a coop of chickens. How much would this production method cost per coop of chickens if the prices were ps = 10 and pc = 10? ______. if the prices were ps = 10, pc = 20? ______. if the prices were ps = 20, pc = 10? ________.
(e) If Pickens’s managers were always minimizing costs, can it be possible to produce a coop of chickens using 150 bushels and 50 bushels of soybeans?
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