A Pharmaceutical Company Produces Three Kinds of Cold Formulas: I

question 67

Multiple Choice

A pharmaceutical company produces three kinds of cold formulas: I, II, and III. It takes 5 hr to produce 1,000 bottles of formula I, 4 hr to produce 1,000 bottles of formula II, and 3 hr to produce 1,000 bottles of formula III. The profits for each 1,000 bottles of formula I, formula II, and formula III are $240, $170, and $210, respectively. Suppose, for a certain production run, there are enough ingredients on hand to make at most 7,000 bottles of formula I, 13,000 bottles of formula II, and 6,000 bottles of formula III. Furthermore, suppose the time for the production run is limited to a maximum of 90 hr. How many bottles of each formula should be produced in this production run so that the profit is maximized? What is the maximum profit realizable by the company? Are there any resources left over?

• A) 6,000 bottles of formula I, 7,000 bottles of formula II, 9,250 bottles of formula III; maximum profit: $8,631.15; Yes, ingredients for 3,750 bottles of formula III
• B) 9,250 bottles of formula I, 6,000 bottles of formula II, 7,000 bottles of formula III; maximum profit: $8,524.95; Yes, ingredients for 3,750 bottles of formula I
• C) 7,000 bottles of formula I, 9,250 bottles of formula II, 6,000 bottles of formula III; maximum profit: $4,512.50; Yes, ingredients for 3,750 bottles of formula II
• D) 16,250 bottles of formula I, no bottles of formula II, 9,250 bottles of formula III; maximum profit: $6,921.35; Yes, 3 hr of the time for the production run

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Definitions:

New Firms

Entrepreneurial ventures that have recently been established in the market.

Dominant Firms

Companies that hold a significant portion of market share within their industry, influencing market prices and competition.

Purely Competitive Markets

Markets characterized by many sellers offering identical products, leading to a high degree of competition and efficiency.

Consumer Surplus

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