A firm makes two products, A and B. Each unit of A costs $10 and sells for $30. Each unit of B costs $5 and sells for $20.

A firm makes two products, A and B. Each unit of A costs $10 and sells for $30. Each unit of B costs $5 and sells for $20. If the firm's goal were to maximize profit what would be the appropriate objective function?

Maximize profit = $40A - $25B

Maximize profit = $40A + $25B

Maximize profit = $20A +$15B

Maximize profit = 0.25A +0.20B

Maximize profit = $50(A + B)

Expert Solution

Profit = Selling Price - Cost

Profit Per Unit of A = 30-10 = 20

Profit Per Unit of B = 20-5 = 15

Here, we have to maximize the profit.

Hence, Our objective equation will be

Maximize Profit = 20A + 15B

keosha answered 2 years ago

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