The Production Planner for Fine Coffees, Inc

question 65

Multiple Choice

The production planner for Fine Coffees, Inc. produces two coffee blends: American (A) and British (B) . He can only get 300 pounds of Colombian beans per week and 200 pounds of Dominican beans 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. The goal of Fine Coffees, Inc. is to maximize profits.
What is the objective function?

• A) P = A + 2B.
• B) P = 12A + 8B.
• C) P = 2A + B.
• D) P = 8A + 12B.
• E) P = 4A + 8B.

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Definitions:

Invisible Hand

A metaphor coined by Adam Smith to describe the self-regulating nature of the market, where individuals pursuing their own interests inadvertently benefit society as a whole.

Competitive Market

A market structure characterized by a large number of buyers and sellers where no single party can dictate the market price of goods or services.

Producer Surplus

The difference between what producers are willing to accept for a good or service versus what they actually receive, often a measure of producer wellbeing.