Question
Carla Inc. produces organic cranberry juice from cranberries it farmed. Unfortunately, it has been a bad year for cranberries because of severe cold weather. Carla
Carla Inc. produces organic cranberry juice from cranberries it farmed. Unfortunately, it has been a bad year for cranberries because of severe cold weather. Carla has only 9,600 litres of juice. It usually sells 14,100 litres at $3.10 per litre. The variable costs of farming the cranberries are $0.65 per litre. Carla has loyal customers, but its managers are worried that the company will lose customers if it does not have juice available for sale when people stop by the farm. A neighbour is willing to sell 4,500 litres of extra cranberry juice at $3.05 per litre.
(b)Using the general decision rule, what is the most per litre that Carla's managers would be willing to pay for additional juice?
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