7. a) A firm producing two goods (X and Y) has the following profit (?) function:...

7. a) A firm producing two goods (X and Y) has the following profit (?) function: Profit: ? =80X-2X2 - XY-3Y2 +100Y Maximum Capacity: X+Y=12 What are the values of X and why that maximizes profits subject to the firm’s maximum capacity? b) Consider the following utility function for a consumer, who consumes goods X and Y whose prices are $8 and $12respectively. Utility function: U=XY+3X+Y If the consumer’s money income (budget is $112), what are the utility maximizing values of X and Y?

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Rahul Sunny answered 1 year ago

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