Question: Planning a National Economy.

The country of Utopia has a newly appointed minister of international trade. She has decided that Utopia's welfare can be served best in the upcoming year by maximizing the net dollar value of Utopia's exports (that is, the dollar value of the exports minus the cost of the materials imported to produce the exports). The following information is relevant to this decision:

 Utopia produces only three products: Steel, machinery, and trucks. For the coming year, the minister thinks that Utopia can sell all it can produce of these three products on the export market at the existing world-market prices of $900 per ton of steel, $2500 per machine, and 3000 per truck.

 To produce one ton of steel it takes .05 machine, .08 truck, .5 person year of labor, and imported materials costing $300. Utopia's steel mills have the capacity of producing up to 300,000 tons annually.

 To produce one machine, it takes .75 ton of steel, .12 of truck, five person years of labor, and imported materials costing $150. Utopia's machinery plants have the capacity to produce up to 50,000 machines per year.

 To produce one truck, it takes one ton of steel, .1 machine, three person years of labor, and imported materials costing $500.

 The pool of labor in Utopia is equivalent to 1,200,000 person years.

The minister is thinking about issuing a self-sufficiency edict, declaring that Utopia cannot import steel, machinery, or trucks. Then she would like to determine the optimal production quantities and optimal export quantities for steel, machinery, and trucks.

Objective: Find the optimal export plan for Utopia's economy under self-sufficiency.

(Hint: Profit equals $490,625)

Price: $2.99

Solution: The downloadable solution consists of 2 pages
Deliverable: Word Document