Allocate budget to total utility, Marketing Management

Assignment Help:

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?


Related Discussions:- Allocate budget to total utility

Pricing sensitivity, Pricing sensitivity: Nagle has identified nine factor...

Pricing sensitivity: Nagle has identified nine factors that contribute to price sensitivity and has also presented various methods or techniques to measure it. The factors that co

Store layout, Store layout The word store layout refers to: How stor...

Store layout The word store layout refers to: How store fixtures and display gondolas are positioned within the store The size of the store fixtures and display gondolas

Test marteting, various approches of test marketing in FMCG

various approches of test marketing in FMCG

What is niche marketing, What is Niche Marketing? Niche Marketing: ...

What is Niche Marketing? Niche Marketing: This Marketing is sometimes also termed as micromarketing. Marketers generally identify niche through dividing a segment within

Describe in detail about the nature of market, Describe in detail about the...

Describe in detail about the Nature of Market There are several aspects of market which determine choice of channel of distribution. Say for instance, where number of buyers

Explain personal characteristics affecting consumer behavior, Problem 1: ...

Problem 1: Define the term motivation and describe Maslow's contribution to motivation. Problem 2: (a) Discuss the needs and requirements for Market segmentation? (b

Organizing sales promotion compagins, Organizing sales promotion compagins ...

Organizing sales promotion compagins 1.       Identifying the requirement: the first requirement is to identify the specific requirement of the firm in resg orting to sales p

.marketing research, Illustrate why marketing research is important to a fi...

Illustrate why marketing research is important to a firm specially in a competitive market situation

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd