Jill, Jack and John each have a chicken as a 4-H project. Jill has agreed to provide Ms. Pullet with 2 eggs a week (for a 2-egg omelet). Poor Jack has a limited amount of money to buy feed for his chicken ($10.00). John wants to maximize profits (note question 5 below). All three visited their local Cooperative Extension office where they were provided the following egg production function:

y = 12.0c^.6s^.3

y is the number of eggs laid by a bird during a 280-day period.

c is the total pounds of corn consumed per bird during the 280-day period.

s is the total pounds of soybean meal consumed per bird during the 280-day period.

1. Derive and plot an expansion path for the production surface.

2. Derive the input demand functions for Jill, Jack and John.

3. Determine the input quantities for Jill, Jack and John if eggs are $3.60 a dozen, corn is $300 a ton (2,000 pounds in a U.S. ton), and soybean meal is $400 a ton. Jack has $10.00 to spend on feed. How much money does each make? Who makes the most money and why? How many eggs do each produce (Jill produces 2 eggs per week).

4. What happens to these quantities if the price of corn decreases from $300 a ton to $200 a ton?

5. What properties of the Cobb-Douglas function may be responsible for very unusual results that is not realistic for one of the chicken owners?

 

Answer rating: 100% (QA)

Let us first prepare the table to ascertain how many units will be produced by Jack and Jill respectively and what will be the respective opportunity ... View the full answer