A Producer of Two Types of Fine Chocolate Bars Utilizes

question 45

Essay

A producer of two types of fine chocolate bars utilizes four basic ingredients: milk, sugar, cocoa, and almonds. The milk bar (M) requires 8 ounces of milk, 2 ounces of sugar, and 3 ounces of cocoa. The almond bar (A) requires 5 ounces of milk, 1.5 ounces of sugar, 2.5 ounces of cocoa, and 2 ounces of almonds. The profit contribution of each bar is $.50. The daily availability of the ingredients is limited up to 5,000 ounces of milk, 1,200 ounces of sugar, 2,000 ounces of cocoa, and 1,000 ounces of almonds.
(a) Formulate and solve the producer's linear programming problem.
(b) What can be concluded about the shadow prices of milk and sugar?

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Definitions:

Absolute Poverty

A condition where individuals or families are unable to meet their basic needs for survival, such as food, shelter, and healthcare.

Global Poverty

The condition of lacking necessary financial resources and basic needs on a worldwide scale, affecting billions of individuals in various countries, especially in developing regions.

Transnational Corporation

A massive enterprise that operates and manages production or delivers services in more than one country.

International Monetary Fund

An international organization created to promote global monetary cooperation, secure financial stability, facilitate international trade, and reduce poverty around the world.