Question
Chaya can protect his rice fields from pests using Spora super, a petrochemical pesticide, or Neem cake, an organic product. Chaya's production function is =
Chaya can protect his rice fields from pests using Spora super, a petrochemical pesticide, or Neem cake, an organic product. Chaya's production function is = + 2 where Q is measured in acres and S and N are measured in units.
a. In a diagram, measuring units of Spora super along the horizontal axis and units of neem cake along the vertical axis draw Chaya's isoquant when he wants to protect 4 acres of land from pests.
b. What is the marginal product of Spora super? What is the marginal product of Neem cake? What is the marginal rate of technical substitution of Spora super for Neem cake? Suppose that the unit cost of Spora super is $10 while the unit cost of neem cake is $25.
c. To protect his rice fields, does Chaya use one or both pesticides? In what amounts? What is Chaya's average cost of protecting one acre of land? d. In your diagram, add an iso-cost line and illustrate Chaya's cost minimizing combination of pesticides
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