A Manufacturing Firm Has Four Plants and Wants to Find

question 45

Multiple Choice

A manufacturing firm has four plants and wants to find the most efficient means of meeting the requirements of its four customers. The relevant information for the plants and customers, along with shipping costs in dollars per unit, are shown in the table below:
$$\text{Customer (requirement) }\\\begin{array} { l c c c c } &&Customer ~2 &Customer ~3& Customer ~4\\\text { Factory (capacity) }&\text{ Customer } 1 ( 125 ) & ( 150 ) & ( 175 ) & ( 75 ) \\ A ( 100 ) & \$ 15 & \$ 10 & \$ 20 & \$ 17 \\ \mathrm {~B} ( 75 ) & \$ 20 & \$ 12 & \$ 19 & \$ 20 \\ \mathrm { C } ( 100 ) & \$ 22 & \$ 20 & \$ 25 & \$ 14 \\ \mathrm { D } ( 250 ) & \$ 21 & \$ 15 & \$ 28 & \$ 12 \end{array}$$
How many demand nodes are present in this problem?

• A) 1
• B) 2
• C) 3
• D) 4
• E) 5

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Definitions:

Consumer Surplus

The difference between the total amount that consumers are willing and able to pay for a good or service versus the total amount they actually pay.

Producer Surplus

The difference between what producers are willing to sell a good for and the actual price they receive, reflecting extra profit.

Relatively Elastic

Refers to a situation in which the demand or supply for a good or service greatly responds to changes in price.

Tax Incidence

Refers to the distribution of the economic burden of a tax between buyers and sellers in the market.