1. A) An automobile company sells 2 tires for every one frame. Now the demand function for tire is t=189 - P and demand function for frame f-180 - Pr and firm's cost function is C=3t2 + 3f2 + 3tf + 570 now use the Lagrange Multiplier Method of constrained optimization to optimize the profit. b) Now use the Bordered Hessian method to show that all the optimal values that you find in (a) maximize the profit. c) Define the significance of Lagrange Multiplier in optimization using this context. What is the other name of Lagrange Multiplier? Please briefly discuss how it will affect a firm's decision in this context? (Hint: is there any constant in your constraint?)

1. A) An automobile company sells 2 tires for every one frame. Now the demand function for tire is t=189 - P and demand function for frame f-180 - Pr and firm's cost function is C=3t2 + 3f2 + 3tf + 570 now use the Lagrange Multiplier Method of constrained optimization to optimize the profit. b) Now use the Bordered Hessian method to show that all the optimal values that you find in (a) maximize the profit. c) Define the significance of Lagrange Multiplier in optimization using this context. What is the other name of Lagrange Multiplier? Please briefly discuss how it will affect a firm's decision in this context? (Hint: is there any constant in your constraint?)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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