A firm makes three products X1, X2 and X3 with two inputs.
Maximize Revenue Z = 3000X1 + 1000X2 + 800X3
Subject to constraints:
80X1 + 80X2 + 0 X3 ≤ 50 (input 1)
40X1 + 0X2 + 40 X3 ≤ 70 (input 2)
X1, X2, X3 ≥ 0 (non-negativity)
1) Solve (by hand) X1*, X2*, X3*, s1*, s2*, Z*.
2) What is the firm’s willingness to pay for another unit of input 1? another unit of input 2?
3) What is the numeric value of the Marginal Loss of X2, what does this result mean?
4) What is the numeric value of the Marginal Loss of X3, what does this result mean?