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Unformatted text preview: z * from increasing the supply at node 2 from 200 to 201 and simultaneously changing the supply at node 4 from 400 to 401? Explain. What happens when you resolve the model? 4. A company is planning on spending $10,000 on advertising. It costs $3,000 per minute to advertise on television and $1,000 per minute to advertise on radio. If the ﬁrm buys x 1 minutes of television advertising and x 2 minutes of radio advertising, its revenue, in thousands of dollars, is given by f ( x 1 ,x 2 ) =2 x 2 1x 2 2 + x 1 x 2 +8 x 1 +3 x 2 . (a) Determine how to spend the advertising budget so as to maximize revenue by using the method of Lagrange multipliers. (b) Are you guaranteed that the solution from (a) is a global optimum? Justify your response. (c) What is the marginal rate at which the optimal revenue increases as the advertising budget is increased?...
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This note was uploaded on 12/19/2011 for the course M E 366l taught by Professor Staff during the Fall '08 term at University of Texas.
 Fall '08
 Staff

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