Question: Suppose the company in the above problem is constrained by the Environmental Protection Agency which has decided that the firm can produce only a

Suppose the company in the above problem is constrained by the Environmental

 

Suppose the company in the above problem is constrained by the Environmental Protection Agency which has decided that the firm can produce only a total of 34 units of x and y combined (i.e. x + y = 34). a. Set up the Lagrangean function and find the constrained optimal values of x and y. b. Check second order conditions by aZyy + bZxx - 2abZxy > 0 for a minimum and aZyy + bZxx - 2abZxy < 0 for a maximum where the constraint is written as ax + by = c. c. Find lambda and interpret. d. Comment in a nontrivial way on the relationshipt between problem 3 above and what lambda is telling you. e. Find the profit level.

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