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19 January, 06:39

Maurice has the following utility function: U (X Y) = 20X+80Y-X^2-2Y^2, where X is his consumption of CDs with a price of $1 and Y is his consumption of movie videos, with a rental price of $2. He plans to spend $41 on both forms of entertainment. Determine the number of CDs and video rentals that will maximize Maurice's utility?

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Answers (1)
  1. 19 January, 09:14
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    7 Cd abd 17 movie videos maximize the utility function in 873

    Explanation:

    We solve this using excel solver:

    A B C D

    1. - CD Movie

    2. - Price 1 2

    3 - Q 7 17

    4. - Subtotal 7 34 41

    The subtotal are Price per quantity on each product

    and then we add them to get the total.

    The we write the utility function

    =20*B3+80*C3-POWER (B3; 2) - 2*POWER (C3; 2)

    Utility 873

    We will maximize hat function by changin cell B3 and C3

    with the constrain of D4 lower or equalt to 41
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Home » Business » Maurice has the following utility function: U (X Y) = 20X+80Y-X^2-2Y^2, where X is his consumption of CDs with a price of $1 and Y is his consumption of movie videos, with a rental price of $2. He plans to spend $41 on both forms of entertainment.
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