​How Is Sensitivity Analysis Used in Linear Programming? Given an Example

question 15

Essay

​How is sensitivity analysis used in linear programming? Given an example of what type of questions that can be
answered.

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Definitions:

Long-run Average Total Cost

The cost per unit of output incurred when all factors of production, including physical capital, are variable.

Minimum Efficient Scale

The smallest level of production at which a firm can achieve the lowest long-run average total costs.

Constant Returns to Scale

A situation in which the proportionate increase in inputs leads to an equal proportionate increase in outputs, meaning costs and outputs scale equally as production expands.

Diseconomies of Scale

A situation where a business's cost per unit increases as it produces more items, due to inefficiencies that arise with scaling up production.