Question
You run a drink store selling bandung and barley water. The cost of producing x litres of bandung and y litres of barley water is
You run a drink store selling bandung and barley water. The cost of producing x litres of bandung and y litres of barley water is C(x, y) = 2x + 3y. At the same time, your sales research team expects that the total revenue you will earn from selling x litres of bandung and y litres of barley water is R(x, y) = 4 log(1 + x) + 4 log(1 + y). Suppose you have a production budget of $200.
(a) What is the amount of bandung and barley water you should produce in order to maximize revenue?
(b) What is the amount of bandung and barley water you should produce in order to maximize profit? (Profit is difference between revenue and cost.)
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