Question: I What's the Linear Programming equation for Q1-4 Please help with detailed numerical steps, instead of intrepretation behind. Cost in a Multiproduct Firm: Part 2
I What's the Linear Programming equation for Q1-4 Please help with detailed numerical steps, instead of intrepretation behind.
Cost in a Multiproduct Firm: Part 2 You manage a two-product firm. The production technology requires a mixture of capital and labor to produce each product. Capital is shared, while labor is specific to each of the two products. For the first product, capital (K0) and labor (L10) must satisfy the following, in order to produce q1 units: q1KL1. Likewise, producing q2 units of the second product requires capital (K) and labor (now L20 ) such that: q2KL2. In addition, total capital is limited to a maximum of 200 units. (So K200.) Naturally, K,L1,L2 are all required to be non-negative. Capital costs 100 per unit, labor for the first product costs 140 per unit and labor for the second product costs 175 per unit. The first product sells for 275 per unit, and the second sells for 300 per unit. 1. Initially suppose only the first product is present. Determine and interpret your optimal 1 production plan. 2. Next suppose only the second product is present. Determine and interpret your optimal production plan. 3. Now assume both products are present. Determine and interpret your optimal production plan. 4. Repeat the three parts above assuming the first product sells for 200 per unit. 5. Fill in the following table: q1q2MC of q1 with q2 fixed. MC of q2 with q1 fixed. 5050 50100 50150 10050 100100 100150 150100 150150 ( MC is the marginal cost) 6. Write a short paragraph interpreting your findings. 1. The "optimal production plan" for the purposes of this exercise is the one that maximizes profit, and Profit=Revenue-Cost.
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