Economics

posted by .

(iii) Bright Future, Ltd (BF) is a nonprofit foundation providing medical treatment
to emotionally distressed children. BF has hired you as a business consultant to
design an employment policy that would be consistent with its goal of
providing the maximum possible service given its limited financial resources.
You have determined that the service (Z) provided by BF is a function of its
medical staff input (M) and sound service input (S) which is given by:
Z = M + .5S + .5 MS - S2
BF’s staff budget for the coming year is $1,200,000. Annual employment costs
are $30,000 for each social service staff member (S) and $60,000 for each medical
staff member (M).2
(a) Using the Lagrangean multiplier approach calculate the optimal (i.e.,
service maximizing) combination of medical and social staff. Determine
the optimal amount of service provided by BF.

(b) Calculate BF’s marginal cost. Explain your answer.
(c) Using Excel-Solver verify your answer to (a).

(Show your work. Show the spreadsheets in detail. Provide print outs
with Solver window. To print the solver window, use print screen
command on your key board and then create a MS Word document
using paste.)

(iv) The own price elasticity of demand for a pack of cigarettes is estimated to be -.4.
Current price and consumption are $4.00 and 2 million units per year.
Assuming a linear demand relationship determine the demand equation for
cigarettes. Show all your calculations.

Respond to this Question

First Name
School Subject
Your Answer

Similar Questions

  1. Economics

    The Qwik Serve Clinic always has three M.D.s and eight R.N.s working at its 24-hour clinic, which serves customers with minor emergencies and ailments. The clinic has hired an efficiency expert to examine its operations and make suggestions …
  2. Managerial Econ

    The Qwik Serve Clinic always has three M.D.s and eight R.N.s working at its 24-hour clinic, which serves customers with minor emergencies and ailments. The clinic has hired an efficiency expert to examine its operations and make suggestions …
  3. Business

    If you were a business consultant hired to assist a company outline a strategy for going global, what country would you suggest they venture into, what three types of advice would you offer and why?
  4. economics

    the south African government is not providing enough welfare or subsidies to the poor and underpriviledged. what are the cost and consequences of providing the subsidies and welfare?
  5. Economics

    The South African government is not providing enough welfare of subsidies to the poor and underpriviledged. -What are welfare payments or consumer subsidies?
  6. Economics

    THE SOUTH AFRICAN GOVERNMENT IS NOT PROVIDING ENOUGH WELFARE OR SUBSIDIES TO THE POOR AND UNDERPRIVILEDGED. 1.What are welfare payments or consumer subsidies?
  7. Law

    What are three areas in which the private sector is extensively involved in correctional services?
  8. Business Economics

    What subsidies and welfare payments is the south african government providing and to whom ?
  9. economic

    what is south african government providing for whom ?
  10. eced

    Which situation will lead to the largest heritability coefficient for reading disability?

More Similar Questions