Creatine and Protein Are Common Supplements in Most Bodybuilding Products

question 39

Essay

Creatine and protein are common supplements in most bodybuilding products.Bodyworks,a nutrition health store,makes a powder supplement that combines creatine and protein from two ingredients (X₁ and X₂).Ingredient X₁ provides 20 grams of protein and 5 grams of creatine per pound.Ingredient X₂ provides 15 grams of protein and 3 grams of creatine per pound.Ingredients X₁ and X₂ cost Bodyworks $5 and $7 per pound,respectively.Bodyworks wants its supplement to contain at least 30 grams of protein and 10 grams of creatine per pound and be produced at the least cost.
Determine what combination will maximize profits.

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Definitions:

Implicit Costs

The opportunity costs of using resources owned by the firm for its own use, rather than selling those resources externally.

Economic Profits

The surplus remaining after deducting all costs, including opportunity costs, from total revenues, indicating the financial performance exceeding the break-even point.

Implicit Costs

The opportunity costs that arise from using resources owned by the firm for its own production instead of earning revenue from these resources elsewhere.

Normal Profit

The lowest amount of profit a company must earn to stay competitive and cover its opportunity costs.