Delisshious Toasty Chocolates Company Largely Produces Two Types of Chocolate

question 36

Essay

Delisshious Toasty Chocolates Company largely produces two types of chocolate bars, Almond Tasty and Cashew Crunchy. The maintenance costs per day incurred to produce the two types of chocolate bars are $100 and $120, respectively. The manufacturing cost per chocolate bar is $2 for Almond Tasty and $2.5 for Cashew Crunchy. The daily production capacity of Almond Tasty and Cashew Crunchy chocolate bars are 1100 and 1250, respectively. There is only one machine to produce whichever type of chocolate bar will be produced that day. Only one type of bar can be made on a given day.
Let C₁ = the number of Almond Tasty chocolate bars produced
C₂ = the number of Cashew Crunchy chocolate bars are produced
Y₁ = 1 if the machine produces Almond Tasty; 0, otherwise
Y₂ = 1 if the machine produces Cashew Crunchy; 0, otherwise a. Write a constraint that sets the next day's maximum production of Almond Tasty to 1100.
b. Write a constraint that sets the next day's maximum production of Cashew Crunchy to 1250.
c. Write a constraint that requires that production be set up for exactly one of the two chocolates bars.
d. Write the cost function to be minimized.

---

Definitions:

Monopolistic Competition

A market structure characterized by many firms selling products that are similar but not identical, allowing for product differentiation.

ATC

Average Total Cost, which is the total cost divided by the quantity of output produced.

MR

Marginal Revenue is the additional income from selling one more unit of a good; sometimes equal to price.

Short-Run Equilibrium

A situation in which the quantity supplied and quantity demanded in a market are equal at a particular price level, but only for a temporary period.