A03 - 200 units In addition once either product is sold it...

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Managerial ACG 2071 Professor Lin Spring 2006 Assignment #03 1. This is a continuation of problem 2-8 in the book. Suppose the respective factor prices are 4, 2, 1, and 5 per unit. Fill in the following table. q 1 2 3 4 5 6 7 8 TC z 1 z 2 z 3 z 4 ? 1 ? 2 ? 3 ? 4 ? 5 ? 6 MC 2. Ralph manages a two product firm. The 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 (K) and labor (L 1 ) must satisfy 1 1 KL q in order to produce q 1 units. Likewise, producing q 2 units of the second product requires capital (K) and labor (now L 2 ) such that 2 2 KL q . Total capital is limited to a maximum of
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Unformatted text preview: 200 units. In addition, once either product is sold, it is removed from inventory and packaged for shipping. This packaging requires B boxes such that q 1 + q 2 = B. All variables are required to be nonnegative. Capital costs 300 per unit, Labor for the first product costs 250 and that for the second product costs 400 per unit. The box costs 50. (1) Write down the Ralph’ s problem and determine the optimal mix of factors given Ralph plan to produce and sell q 1 = 200 and q 2 = 100. What is the total cost? (2) Determine the shadow price for each constraint. (3) Determine the marginal cost for the first and the second product, respectively....
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