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?

Question

Max

Business

9 February, 06:53

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?

+4

Answers (1)

Know the Answer?

Donavan · Answer 1

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