Answer to Question #206586 in Microeconomics for Zia

Question

Use marginal approach calculate the optimum combination of the following 

Product (Y₁) - product (Y₂) relationships given data of two competitive crop products with Total land input X = 35 units. 

Price of product 

Y1 is $10 and the price of product Y2 is $5 per unit). 

The price ratio Py1 is $10 and price Py2 is 5. Use table for showing your calculations.  

  

Production functions for two crop products using the same input X (35 acres of land)  

Input X  

0 

10 

20 

30 

40 

50 

60 

70  

Product Y₁  

0  

14  

26 

36 

44 

50  

54  

56  

Product Y₂  

0  

22  

40  

56  

70  

82  

92  

98

Answer 1

Solution:

See the below table:

 

 

 

 

 

The optimum factors combination or the least cost combination refers to the combination of factors with which a firm can produce a specific quantity of output at the lowest possible cost.

As per the table calculation, the optimum combination, which represents the least cost combination is as follows:

Crop product Y1 = 56 Units

Crop product Y2 = 98 Units