Question

When an LP objective function is to maximize profits:

Select one:

a. resource constraints must be of the £ variety.

b. resource constraints must be of the ³ variety.

c. all input costs must be variable.

d. the total revenue function must not be linear.

When some capacity constraints are binding, although others are nonbinding:

Select one:

a. the shadow price for new capacity is positive.

b. the shadow price for output is positive.

c. the marginal revenue product for new capacity is positive.

d. the marginal product of new capacity is positive.

When the costs of all inputs rise by a given percentage, the isocost line:

Select one:

a. slope decreases.

b. slope is unaffected.

c. and objective function intersection will be unaffected.

d. slope increases.

When the objective function coincides with the boundary of the feasible space:

Select one:

a. an optimal solution cannot be determined.

b. there is only one optimal solution.

c. there are many possible optimal solutions.

d. an optimal solution does not exist.

When the primal LP problem is to maximize revenue subject to various input constraints, the shadow prices of inputs in the dual constraints:

Select one:

a. equal the marginal revenue product of each input.

b. are positive for inputs with excess capacity.

c. equals zero for fully utilized inputs.

d. equal the marginal product of each input.

Answer 1

Ans 1= a..

Ans 2 =b ( A binding constraint is a constraint whose value satisfies the optimal solution and any change in it value changes the optimal solution. Shadow price of each constraint will be benefit. Non binding constraint has shadow price of zero while binding constraint have other shadow prices than zero. So shadow price of output will be positive.

Ans 3= b (when cost of all inputs will increase in same percentage then iso cost line will move but the slope will not shift or effected..If only one input cost will change then isocost line's slope will change.so ans is slope will unaffected.

Ans 4= b( The optimum solution to the LPP occurs either at the corner or the boundary of fesible space.The corner boundary would be the one, which is farthest from the origin . So there is one optimum solution.

Ans 5=d