In: Economics
Your own a beer producing company which can advertise on both television (T) and radio (R). The effect of TV and radio commercials on sales is again given by S(T,R) = 400 + 24T − 3T2 + 56R−3R2 +2TR. You have a budget of $25 that you can spend on T and R. The price of a TV commercial is $1 and the price of a radio commercial is $1. 1.
Determine the optimal level of TV commercials T and radio commercials R if you have to spend all of your budget.
Determine the optimal level of TV commercials T and radio commercials R if you DO NOT have to spend all of your budget. Do you obtain the same answer as above?
case 1: when you have to spend all of your budget.
case: 2hen you do not have to spend all of your budget.