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HighAllegiant
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[SOLVED] Managerial Economics Problem
SOLVED
I already solved (a) by finding the derivative with respect to (x,y) and equating to 0.
(a) X* = 15, Y* = 20
My prof provided the answer to (b) and I have absolutely no idea to how he arrived at it.
I assumed the the Income(M)=31 but without any given prices for (x,y), I cannot seem to apply it into a Lagrangian method.
(I'm assuming I use the Lagrangian method because it was the most recent lecture to this question. (c) also asks a follow up question which requires the Langrangian multiplier.)
Could anyone help me?
(b) X* = 13, Y* = 18
SOLVED
A firm has decided through regression analysis that its sales (S) are a function of the amount of advertising (measured in units) in two different media, television (x) and magazines (y):
(a) Find the level of TV and magazine advertising units that maximizes the firm's sales.
S(x, y) = 100 – x2 + 30x – y2 + 40y
(b) Suppose that the advertising budget is restricted to 31 units. Determine the level of advertising (in units) that maximizes sales subject to this budget constraint.
(c) Give an economic interpretation for the value of the Lagrangian Multiplier obtained in part (b) above.
I already solved (a) by finding the derivative with respect to (x,y) and equating to 0.
(a) X* = 15, Y* = 20
My prof provided the answer to (b) and I have absolutely no idea to how he arrived at it.
I assumed the the Income(M)=31 but without any given prices for (x,y), I cannot seem to apply it into a Lagrangian method.
(I'm assuming I use the Lagrangian method because it was the most recent lecture to this question. (c) also asks a follow up question which requires the Langrangian multiplier.)
Could anyone help me?
(b) X* = 13, Y* = 18
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