eonstruetion of eost Junetion Ralph must seleet the best eombination of four faetors of produetion, denoted Zb Z2, ZJ, and Z4, to produee q units of output. Technieal requirements are defined by the following eonstraints:

Zl + zz ~ q (so the first two are perfect substitutes);

ZJ + Z4 ~ q (so the last two are also perfect substitutes);

Zl s 5;

zz s 5;

ZJ s 6; and Z4 s 10.

The respeetive faetor prices are 1,2,3, and 4 per unit.

Determine Ralph's eost eurve, for 0 s q s 10. Use an LP (a linear program);

plot the eost eurve. Also, how do you interpret the shadow prices in the LP?

AppendixLO1