Linear Programming Concepts

question 32

Short Answer

Linear Programming Concepts. Indicate whether each of the following statements is true or false. Defend your answer.
A. Linear programming can be used for solving any type of constrained optimization problem where the relations involved can be approximated by linear equations.
B. Linear revenue, cost and profit relations will be observed when output prices, input prices, and average variable costs are constant.
C. Equal distances along a given production process ray in a linear programming problem always represent an identical level of output
D. At isoquant segment midpoints, each adjacent production process must be used to produce 50% of output efficiently.
E. Maximizing a LP profit contribution objective function always results in also maximizing total net profits.

---

Definitions:

Skimming Strategy

A pricing tactic that involves setting a high price for a new product to maximize profits from segments willing to pay more, before lowering the price over time.

Price Insensitivity

A condition where the demand for a product is unresponsive or less sensitive to changes in its price.

Product Sampling

A promotional tactic where customers are given a sample of a product for free with the goal of increasing awareness or boosting sales.

Initial Purchase

The first time a customer buys a product or service from a business, marking the beginning of the consumer-brand relationship.