(b) A firm manufactures benches and tables: the quantity of benches manufactured is B and the quantity of tables manufactured is T. The total cost of manufacturing benches and tables is given by the equation: Cost = 3B2 + 5T² – 2BT. There is a shortage of lumber available to manufacture these items, and so, only 60 items in total have been promised to a customer. (i) Create the Lagrangian expression for Cost. (ii) The Lagrangian equations are given: 6B – 2T – 1 = 0 10T – 2B – 1 = 0 60 – B -T= 0 Calculate the minimum cost possible. (iii) If more lumber now becomes available, what selling price would be required to make a profit on an additional item produced?

(b) A firm manufactures benches and tables: the quantity of benches manufactured is B and the quantity of tables manufactured is T. The total cost of manufacturing benches and tables is given by the equation: Cost = 3B2 + 5T² – 2BT. There is a shortage of lumber available to manufacture these items, and so, only 60 items in total have been promised to a customer. (i) Create the Lagrangian expression for Cost. (ii) The Lagrangian equations are given: 6B – 2T – 1 = 0 10T – 2B – 1 = 0 60 – B -T= 0 Calculate the minimum cost possible. (iii) If more lumber now becomes available, what selling price would be required to make a profit on an additional item produced?

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter16: Labor Markets

Section: Chapter Questions

Problem 16.7P

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