Question

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?

Answer 1

Answer:

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