EBK MICROECONOMICS
EBK MICROECONOMICS
5th Edition
ISBN: 9781118883228
Author: David
Publisher: YUZU
Question
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Chapter 1, Problem 1.17P
To determine

(a)

The objective function for the given problem.

Expert Solution
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Answer to Problem 1.17P

The objective function for the given problem is to minimize

  TC(X,Y)

Explanation of Solution

The objective function is the relationship that is maximized (or minimized) by the decision-maker.

Here, in the given case, the firm is seeking to minimize the total cost to operate plant one and two. Therefore, the objective function will be:

  TC(X,Y)

To determine

(b)

The constraints for the given problem.

Expert Solution
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Answer to Problem 1.17P

The constraints for the given problem is:

  X+Y=1,000,000 metric tons

Explanation of Solution

A constraint is a restriction that will be placed on the firm.

Here, in the given case the firm will have 1 million metric tons of emission. Therefore, the constraint can be given as:

  X+Y=1,000,000 metric tons

To determine

(c)

The statement of constrained optimization.

Expert Solution
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Answer to Problem 1.17P

The statement of constrained optimization is:

  objective:min( X,Y)TC(X,Y)subject to:X+Y=1,000,000 metric tons

Explanation of Solution

A statement of constrained optimization states the kind of functions a decision-maker wants to minimize or maximize along with the constraints.

In this, the perspective of the decision-maker must be considered.

In the given case, the objective function is TC(X,Y) which is minimized by the firm.

The given constraint is X+Y=1,000,000 metric tons

. Therefore, the statement for the constraint optimization can be given as:

  objective:min( X,Y)TC(X,Y)subject to:X+Y=1,000,000 metric tons

To determine

(d)

The emission level from each plant chosen by the firm.

Expert Solution
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Answer to Problem 1.17P

The emission level from each plant chosen by the firm is given as:

Emission plant 1 (X)TC plant 1Emission plant 2 (Y)TC plant 2TC
0$4901,000,000$10$500
250,000$360750,000$40$400
500,000$250500,000$90$340
750,000$160250,000$160$320
1,000,000$900$250$340

Explanation of Solution

The allocation of operating cost for plant 1 and plant 2 can be represented in the following tabular form:

Emission plant 1 (X)TC plant 1Emission plant 2 (Y)TC plant 2TC
0$4901,000,000$10$500
250,000$360750,000$40$400
500,000$250500,000$90$340
750,000$160250,000$160$320
1,000,000$900$250$340

From the above table, it is concluded that when X =750,000 metric tons and Y = 250,000 metric ton, then the total operating cost is minimized.

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