Assume you own a greenhouse that can be used to grow mums, pansies or a combination of
Question:
Assume you own a greenhouse that can be used to grow mums, pansies or a combination of each. After careful research you have determined that the following combinations are possible and you wish to choose that combination which will maximize profit from the greenhouse. Calculate the substitution ratio and answer the questions following.
COmbination | Mums (Pots) | Pansies (flats) | Sub. Ration | Price Ration (for prices in question 1) | A | B | C | D |
#1 | 0 | 1750 | XXXX | 2 | 0.67 | 3 | 3.33 | |
#2 | 220 | 1644 | -0.48 | 2 | 0.67 | 3 | 3.33 | |
#3 | 442 | 1524 | -0.54 | 2 | 0.67 | 3 | 3.33 | |
#4 | 646 | 1400 | -0.61 | 2 | 0.67 | 3 | 3.33 | |
#5 | 810 | 1267 | -0.81 | 2 | 0.67 | 3 | 3.33 | |
#6 | 925 | 1119 | -1.29 | 2 | 0.67 | 3 | 3.33 | |
#7 | 1021 | 957 | -1.69 | 2 | 0.67 | 3 | 3.33 | |
#8 | 1111 | 791 | -1.84 | 2 | 0.67 | 3 | 3.33 | |
#9 | 1192 | 612 | -2.21 | 2 | 0.67 | 3 | 3.33 | |
#10 | 1266 | 412 | -2.7 | 2 | 0.67 | 3 | 3.33 | |
#11 | 1330 | 200 | -3.31 | 2 | 0.67 | 3 | 3.33 | |
#12 | 1386 | 0 | -3.57 | 2 | 0.67 | 3 | 3.33 |
Calculate the price ratio for each combination of prices and fill in the appropriate column above. Then find the profit maximizing enterprise combination for each case.
Ent. Comb
a) Mums with a price of $2.00 per pot and pansies with a price of $1.00 per flat.
b) Mums with a price of $2.00 per pot and pansies with a price of $3.00 per flat.
c) Mums with a price of $3.00 per pot and pansies with a price of $1.00 per flat.
d) Mums with a price of $4.00 per pot and pansies with a price of $1.20 per flat.
2. If mums sold for $2.20 per pot, what would the price of mums have to be to make combination #8 the exact profit maximizing combination? SHOW WORK!
3. Do mums and pansies show a complementary enterprise relationship in this problem? Carefully explain how you arrived at your answer.
4. In an enterprise combination problem, some input must be fixed. What is the fixed input in this problem?