This preview shows page 1. Sign up to view the full content.
Unformatted text preview: z * from increas-ing 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 1-x 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?...
View Full Document
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