Question

1. Assume the price of grain is $0.12 per pound, and the price of hay is $0.08 per pound. Answer the questions below. Feed ration Grain (lbs) Hay (lbs) Input substitution ratio Input price ratio Total cost of ration 825 1350 XXXX XXXX 1.5 B XXXX 198.4 2.93 с 900 975 1050 1125 1200 1130 935 770 625 525 445 E G 1275 a. Fill out the table (show detailed calculations for at least one row). To get you started, here is how to fill out the row when the feed ration is B. The computed values are shown in the table. Input substitution ratio - Change in hay divided by change in grain (1130 - 1350)/(900-825) -2.93 (you can ignore the negative sign). Input price ratio - The price of grain divided by the price of hay 0.12/0.08 -1.5 Total cost of ration - The price of grain times the quantity of grain plus the price of hay times the quantity of hay 0.12*900+ 0.081130108 + 90.4.-198.4 b. What is the least-cost combination of grains and hay? c. What is the total cost associated with the least-cost combination of grain and hay?

Answer 1

Feed ration	Input Substitution ratio	Input Price ratio	Total cost of ration
C	4.8	1.5	191.8
D	2.2	1.5	187.6
E	1.93	1.5	185
F	1.33	1.5	186
G	1.06	1.5	188.6

b) Least-cost combination of grains and hay is ration E

c) 185