A website offers a place for people to buy and sell emeralds, but information about emeralds can be quite imperfect. The website then enacts a rule that all sellers in the market must pay for two independent examinations of their emerald, which are available to the customer for inspection. a. How would you expect this improved information to affect demand for emeralds on this website? b. How would you expect this improved information to affect the quantity of high-quality emeralds sold on the website?
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Step 1: The website creates a rule that all sellers in the market must pay for two independent examinations of their emeralds. Show more…
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Zales Jewelers uses rubies and sapphires to produce two types of rings. A Type 1 ring requires 2 rubies, 3 sapphires, and 1 hour of jeweler's labor. A Type 2 ring requires 3 rubies, 2 sapphires, and 2 hours of jeweler's labor. Each Type 1 ring sells for $400, and each Type 2 ring sells for $500. All rings produced by Zales can be sold. Zales now has 100 rubies, 120 sapphires, and 70 hours of jeweler's labor. Extra rubies can be purchased at a cost of $100 per ruby. Market demand requires that the company produce at least 20 Type 1 rings and at least 25 Type 2 rings. i) Find the optimal solution using the Big M method. ii) What is the most that Zales would be willing to pay for another hour of jeweler's labor? (Use Simplex Dual Method)
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