>> Business Economics
The nation’s largest jams and jellies processor has a major Midwestern production facility that can produce both items. Its current production capacity is four million pounds of jam per month (any variety of jam) or six million pounds of grape jelly per month. Due to some efficiencies in joint production (i.e. production possibilities), the facility is currently producing four million pounds of grape jelly and three million pounds of jam per month. The Operations VP of the company has indicated that the plant is currently operating both efficiently and at maximum production potential. Answer the following questions regarding the economics of the plant.
b. A new “extrusion” process is being considered for grape jelly production.Although engineers have not been able to pinpoint specific production increases, they are estimating it to be in the ten to 15 percent range. It would not affect the jam production potential as the fruit bits are not extruded for the jams.Using an illustration only (no specific numbers), demonstrate how the new extrusion process would affect the production possibility curve constructed in (a) above