Problems

P9.1 LP Basics. Indicate whether each of the following statements is true or false and explain why.

A. Constant returns to scale and constant input prices are the only requirements for a total cost function to be linear.

B. Changing input prices will always alter the slope of a given isocost line.

C. In profit-maximization linear programming problems, negative values for slack variables imply that the amount of an input resource employed exceeds the amount available.

D. Equal distances along a given process ray indicate equal output quantities.

E. Nonbinding constraints are constraints that intersect at the optimum solution.

P9.2 Fixed Input Combinations. Cherry Devices, Inc., assembles connectors and terminals for electronic products at a plant in New Haven, Connecticut. The plant uses labor (L) and capital (K) in an assembly line process to produce output (Q), where

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