Unformatted text preview: AMS 341 Spring, 2011 Homework Set # 5 — Solution Notes #5, Ch. 5 Review: a45 a54 Corn Hops Malt BEER ( 40 3 , 40 3 ) ALE Let P a = price of ale and P b = price of beer (a) Current basis remains optimal if the slope of the isoprofit line is between malt and corn constraints, therefore 2 ≤ P a 50 ≤  . 5 or 25 ≤ P a ≤ 100. (b) 2 ≤ 40 P b ≤  . 5 or 20 ≤ P b ≤ 80. (c)Optimal solution is where the corn and malt constraints are binding. If we change amount of available corn we lose feasibility if corn constraint moves below (20 , 0) (20 bushels of corn) or move beyond hopsmalt intersection (10 , 20) (50 bushels of corn). Thus current basis remains optimal if 20 ≤ corn availability ≤ 50. If 40 + Δ bushels of corn are available, then the new is where ALE+2BEER ≤ 40+Δ and 2ALE+BEER=40, where z = 1200 + 20Δ. Thus corn shadow price is $20. (d) The shadow price of hops is $0....
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This note was uploaded on 05/28/2011 for the course AMS 341 taught by Professor Arkin,e during the Spring '08 term at SUNY Stony Brook.
 Spring '08
 Arkin,E

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