Chapter 6.8, Problem 2P

Explanation of Solution

a.

Shadow prices for the Sugarco problem:

Shadow Price for Sugar Const. = 4

Shadow Price for Chocolate Const. = 1

If 1 extra ounce of sugar were available profits would increase by $4...

Explanation of Solution

b.

profit of Sugarcos:

From the section 6.3, the current basis remains optimal if,

$\text{100/3}\le \text{Available Sugar}\le \text{100}$

Here,

$\Delta b_1=60$

Explanation of Solution

c.

Justification:

Here,

$\Delta b_1=\text{ -}10$

Explanation of Solution

d.

Justification:

Here, current basi...