Question

The local cleaner launders white clothes using the production function q=G+2S, where G is the number of cups of a generic bleach and S is the number of cups of a super bleach that is twice as potent. 1. What is the marginal product of G and S ? 2. In a graph where you measure cups of generic bleach along the horizontal axis draw a couple of isoquants. Add an arrow to indicate the direction of increasing quantity. 3. If the price of generic bleach is pG​=$1 while the price of super bleach is ps=$1.5 what bleach should the cleaner use if it wanted to keep the cost of production as low as possible?

Answer 1

1. The marginal product of G is 1, and the marginal product of S is 2. 2. Isoquants in a graph of cups of generic bleach will be convex to the origin, and the arrow indicating increasing quantity will point northeast. 3. To minimize cost, compare bleach prices to their respective marginal products.

Step-by-step explanation:

1. The marginal product of G is equal to 1, which means that for each additional cup of generic bleach used, the output increases by 1 unit.

The marginal product of S is equal to 2, which means that for each additional cup of super bleach used, the output increases by 2 units.

2. In a graph where the horizontal axis represents cups of generic bleach, isoquants represent combinations of G and S that produce the same level of output. The isoquants will be convex to the origin due to the diminishing marginal product of both G and S. The arrow indicating the direction of increasing quantity will point towards the northeast direction.

3. To minimize the cost of production, the cleaner should compare the prices of generic bleach (pG) and super bleach (ps) with their respective marginal products. If the ratio of pG to the marginal product of G is smaller than the ratio of ps to the marginal product of S, the cleaner should use more generic bleach. If the reverse is true, the cleaner should use more super bleach.