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Unformatted text preview: d) SP for Market for E=$0 e) SP for Market for I=$30 One additional unit of demand for I brings in $120, but need to reduce two units of E, losing $90, net change =$30, sp=30/1=30 f) Suppose the shadow prices are Engineer A: 20 E + 5 I <= 2400 minutes $0/min Engineer B: 15 E + 30 I <= 2400 minutes $3/min Demand for E: E <= 100 units $0/unit Demand for I: I <= 50 units $30/unit Compute the “MC” E =$45 Reduced cost for E:$0 Compute “MC” I =$120 Reduced cost for I:$0 h) To produce or not to produce a new product, Wireless modem? Assume, no cannibalization. The new product W needs 10 min from A, 10 minutes from B, and sells for $45/unit. Should we produce W? MC for W=$30 < MR=$45, Produce W....
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This note was uploaded on 08/10/2011 for the course BUSQOM 0050 taught by Professor Glowackia during the Spring '08 term at Pittsburgh.
- Spring '08