Allocate budget to total utility, Marketing Management

Jack is deciding how to spend the $6 budget he has allocated for today's telephone calls.  There are only two people he intends to call:  his girlfriend Jill, and his old high school friend, Steve.  Jack's love for Jill is such that he could talk to her forever; the marginal utility of a minute talking to Jill is a constant ten utils, regardless of the number of minutes he talks.  Steve usually has a lot of interesting news, but he becomes dull and boring after awhile; the marginal utility of talking to Steve is given by the equation:

                                                      MU = 60 - 2M

      where M is the number of minutes they have talked so far.  So, the first minute gives Jack 58 utils, the second minute gives him 56 utils, etc.

      It costs 5 cents per minute to call Jill, and 10 cents per minute to call Steve, who lives farther away. 

      How should Jack allocate his budget of $6 to maximize his total utility?  In other words, how many minutes should Jack spend talking to Steve today, and how many minutes talking to Jill?

Posted Date: 2/25/2013 2:06:30 AM | Location : United States







Related Discussions:- Allocate budget to total utility, Assignment Help, Ask Question on Allocate budget to total utility, Get Answer, Expert's Help, Allocate budget to total utility Discussions

Write discussion on Allocate budget to total utility
Your posts are moderated
Related Questions

"The service industry is customer driven, and marketing thus focuses on the needs of the customer and involves finding out what the customer wants and expect first, before any atte

How many factors are affected of strategies human resource investment decision? There are numerous factors which considered of strategies human resource investment decision. Su


The Stock Market The stock market is very close to a perfect competitive market. The price of a stock usually is determined by the market forces of demand and supply of the stock a

Considering the concept of product life cycle, where would you put video games in their life cycle?

how to make a project report in software development organisation?

a) Use the simplified difference quotient method to find g''(x) for g(x)= (2)/(1+2x) b) Determine an equation for the tangent line to the graph of g in part a) at x=0 c) Give th

State the Pricing and factors affecting pricing decisions Price is the consideration in terms of money paid by consumers for bundle of benefits he/she derives by using service/

How is impact of promotional efforts determined? Find out the impact of promotional efforts: Marketing research facilitates appraising and improving the methods of sales p