The Production Planner for Fine Coffees, Inc

question 57

Multiple Choice

The production planner for Fine Coffees, Inc., produces two coffee blends: American (A) and British (B) . Two of his resources are constrained: Columbia beans, of which he can get at most 300 pounds (4,800 ounces) per week; and Dominican beans, of which he can get at most 200 pounds (3,200 ounces) per week. Each pound of American blend coffee requires 12 ounces of Colombian beans and 4 ounces of Dominican beans, while a pound of British blend coffee uses 8 ounces of each type of bean. Profits for the American blend are $2.00 per pound, and profits for the British blend are $1.00 per pound. What are optimal weekly profits?

• A)$0
• B)$400
• C)$700
• D)$800
• E)$900

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Definitions:

Speculative Demand

The demand for an asset or commodity based on the expectation that its price will increase, leading to profits from resale rather than its use or income generation.

Rising Interest Rates

A situation in which the cost of borrowing money increases, often due to central bank policies.

Speculative Motive

The intent to hold cash for the purpose of taking advantage of future financial opportunities that may arise.

Opportunity Cost

The loss of potential gain from other alternatives when one particular alternative is chosen.