In California, biodiesel fuel is produced using a combination of soybean oil (S) and cooking grease (G) leftover from fast food restaurants. Assume that the production function takes the form of q = 25 + G. The price of soybean oil is $12/gallon and the price of grease is $8/gallon. If your company needs to produce q = 100 gallons of biodiesel, what would be the optimal mix of (S) and (G) to utilize to minimize the cost of production? 1. The amount of (S) would be 2. The amount of (G) would be 3. The marginal cost of biodiesel production at q = 100 gallons is

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
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Chapter1: Making Economics Decisions
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WHEN ANSWERING THIS QUESTION ENTER NUMBERS (e.g. 4, not "four").
DO NOT USE SYMBOLS (E.G. NO $). IF NECESSARY ROUND YOUR
ANSWERS TO CENTS (ONE HUNDREDTHS OF A DOLLAR, OR 2 DECIMAL
POINTS).
In California, biodiesel fuel is produced using a combination of soybean
oil (S) and cooking grease (G) leftover from fast food restaurants. Assume
that the production function takes the form of q = 25 + G. The price of
soybean oil is $12/gallon and the price of grease is $8/gallon.
If your company needs to produce q = 100 gallons of biodiesel, what
would be the optimal mix of (S) and (G) to utilize to minimize the cost of
production?
1. The amount of (S) would be
2. The amount of (G) would be
3. The marginal cost of biodiesel production at q = 100 gallons is
4. The average cost of biodiesel at q = 100 gallons is
%3D
Now assume that 50 gallons of grease (G) are available for free (e.g. at no
cost) from restaurants just looking to get rid of their waste products. The
price of grease beyond 50 gallons remains at $8 a gallon. Does the
optimal mix change?
5. The amount of (S) would be
6. The amount of (G) would be
7. The marginal cost of biodiesel production at q = 100 gallons is
8. The average cost of biodiesel at q = 100 gallons is
Transcribed Image Text:WHEN ANSWERING THIS QUESTION ENTER NUMBERS (e.g. 4, not "four"). DO NOT USE SYMBOLS (E.G. NO $). IF NECESSARY ROUND YOUR ANSWERS TO CENTS (ONE HUNDREDTHS OF A DOLLAR, OR 2 DECIMAL POINTS). In California, biodiesel fuel is produced using a combination of soybean oil (S) and cooking grease (G) leftover from fast food restaurants. Assume that the production function takes the form of q = 25 + G. The price of soybean oil is $12/gallon and the price of grease is $8/gallon. If your company needs to produce q = 100 gallons of biodiesel, what would be the optimal mix of (S) and (G) to utilize to minimize the cost of production? 1. The amount of (S) would be 2. The amount of (G) would be 3. The marginal cost of biodiesel production at q = 100 gallons is 4. The average cost of biodiesel at q = 100 gallons is %3D Now assume that 50 gallons of grease (G) are available for free (e.g. at no cost) from restaurants just looking to get rid of their waste products. The price of grease beyond 50 gallons remains at $8 a gallon. Does the optimal mix change? 5. The amount of (S) would be 6. The amount of (G) would be 7. The marginal cost of biodiesel production at q = 100 gallons is 8. The average cost of biodiesel at q = 100 gallons is
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