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You Have Decided to Enter the Candy Business

question 12

Essay

You have decided to enter the candy business.You are considering producing two types of candies: A and B,both of which consist solely of sugar,nuts,and chocolate.At present you have in stock 12,000 ounces of sugar,3000 ounces of nuts,and 3000 ounces of chocolate.The mixture used to make candy A must contain at least 10% nuts and 10% chocolate.The mixture used to make candy B must contain at least 20% nuts.Each ounce of candy A can be sold for $0.40 and each ounce of candy for $0.50.Determine how you can maximize your revenues from candy sales.


Definitions:

Cartel Agreement

A formal, explicit agreement among competing firms to control prices, production, and market shares.

Cartelized Market

A market condition where a few suppliers act together to control prices or limit market competition.

Oligopoly

A market structure dominated by a small number of large firms, leading to limited competition and potentially higher prices for consumers.

Effective Collusion

A situation where firms in a market agree to act together instead of competing, often to fix prices or market shares, to maximize their profits.

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