In order for "limit pricing" to be effective, the firm practicing such a strategy must be able to charge a price that is:_______
1 answer:
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Answer:
Check the explanation
Explanation:
As per current limitation of emission, below will be the optimal solution.
The first attached image below is the screenshot of LP Table to be used to get the result -
The second attached image below is the formula used to get the result -
The third attached image below is the screenshot of solver with constraints, decision variable and objective -
the result is in the fourth attached image;
Product A - 15 units
Product B - 60 units
Total Contribution - 135000
Now EPA has allowed one additional unit of chemical emission. Hence, we will change the available quantity of chemical emission to 61 from 60. Rest all will be same as mentioned in earlier part. The fifth attached image below will be the updated optimal solution -
From the image, it is clear that company has 1 additional unit of particulate emission left (240-239), hence company can reduce the particulate emission by 1 units. Below will be the optimal solution -
Product A - 14
Product B - 61
Contribution - 136000 (increase in contribution by 1000)
Now, we can see that contribution has increased by 1000 which is equal to the contribution of 1 unit of product A.
1 unit of Product A is responsible for 4 unit of particulate emission. Hence company can reduce the emission further 4 units.
Final output will be as follows -
Product A - 13
Product B - 61
Contribution - 135000
Total Particulate Emission used = 13*4 + 61*3 = 235
Total Reduction in Particulate Emission = 240-235 = 5 units
Hence, company should willing to reduce the Particulate Emission by 5 units without affecting its Contribution Maximization objective.
