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Firms often face the problem of allocating an input in fixed supply among different products. Find the optimal crude oil allocation for the following example if the profit associated with square foot of fiber is cut to $0.375, while the profit associated with per gallon of gasoline stayed at $0.50.
• What is gasoline marginal profit, given gasoline production function of ? QG = 72MG – 1.5 MG2,
• What is fiber marginal profit, given fiber production function of ? QF = 80MF – 2MF2,
• Determine the maximize profit.
• Determine total input availability.
For a business that sells a product for which there are many close substitutes,
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The equations representing demand as well as, inverse demand as well as, supply as well as inverse supply are as follows.
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