Question
1. Mark Oliver is bored with his job as a clerk in a department store and decides to open a dry-cleaning business. Mark rents dry-cleaning
1. Mark Oliver is bored with his job as a clerk in a department store and decides to open a dry-cleaning business. Mark rents dry-cleaning equipment which allows three different dry-cleaning processes: Process 1 uses capital (K) and Labor (L) in the ratio of 3 to 1; process 2 uses K/L = 1; and process 3 uses K/L = 1/3. The manufacturer of the equipment indicates that 50 garments can be dry-cleaned by using 2 units of labor and 6 units of capital with process 1, 3 units of labor and 3 units of capital with process 3. The manufacturer also indicates that in order to double the number of garments dry-cleaned, inputs must be doubled with each process. The wage rate (w) for hired help for 1 day's work a unit of labor) is $50, and the rental price of capital (r) is $75 per day. Suppose that Mark cannot incur expenses of more than $750 per day. Determine the maximum number of garments that the business could dry-clean per day and the production process that Mark should utilize.
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