6. Irmaâ��s Handicrafts

Irmaâ��s Handicrafts produces plastic deer for lawn ornaments. â��Itâ��s hard work,â�� says Irma, â��But anything to make a buck.â�� Her production function is given by f(Xâ��,Xâ��)=[min{Xâ��2Xâ��}â��â��, where Xâ�� is the amount of plastic used, Xâ�� is the amount of labor used, and f(Xâ��, Xâ��) us the number of deer produced. (Graph(Plastic Xâ��: 0,5,10,15,20,25,30; Labor(Xâ��: 0,5,10,15,20,25,30))

a. In the graph below, plot green points (triangle symbol) to show a production isoquant representing input combinations that will produce 4 deer. Position purple points (diamond symbol) for another production isoquant representing input combinations that will produce 5 deer. Line segments will automatically connect these points.

b. Does this production function exhibit increasing, decreasing, or constant returns to scale?

c. Place a red line(cross symbols) on the graph such that the most efficient points of the two isoquants are included. If Irma faces factor prices(1,1), what is the cheapest way for her to produce 4 deer? How much does this cost?

d. At the factor prices (1,1), what is the cheapest way to produce 5 deer? How much does this cost?

e. At the factor prices (1,1), the cost of producing y deer with this technology is c(1,1,y) =?

f. At the factor prices (wâ��,wâ��), the cost of producing y deer with this technology is c(wâ��,wâ��, y)=?

Irmaâ��s Handicrafts produces plastic deer for lawn ornaments. â��Itâ��s hard work,â�� says Irma, â��But anything to make a buck.â�� Her production function is given by f(Xâ��,Xâ��)=[min{Xâ��2Xâ��}â��â��, where Xâ�� is the amount of plastic used, Xâ�� is the amount of labor used, and f(Xâ��, Xâ��) us the number of deer produced. (Graph(Plastic Xâ��: 0,5,10,15,20,25,30; Labor(Xâ��: 0,5,10,15,20,25,30))

a. In the graph below, plot green points (triangle symbol) to show a production isoquant representing input combinations that will produce 4 deer. Position purple points (diamond symbol) for another production isoquant representing input combinations that will produce 5 deer. Line segments will automatically connect these points.

b. Does this production function exhibit increasing, decreasing, or constant returns to scale?

c. Place a red line(cross symbols) on the graph such that the most efficient points of the two isoquants are included. If Irma faces factor prices(1,1), what is the cheapest way for her to produce 4 deer? How much does this cost?

d. At the factor prices (1,1), what is the cheapest way to produce 5 deer? How much does this cost?

e. At the factor prices (1,1), the cost of producing y deer with this technology is c(1,1,y) =?

f. At the factor prices (wâ��,wâ��), the cost of producing y deer with this technology is c(wâ��,wâ��, y)=?

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