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

What are the support activities, What are the support activities? Supp...

What are the support activities? Support Activities: Support activities help primary activities through providing infrastructure which allows them to take place ongoing

Factors affecting the choice of distribution channel, Factors affecting the...

Factors affecting the choice of distribution channel Choice of an appropriate distribution channel is very significant as pricing as well as promotion strategy are dependent up

Formulate suitable strategy for the firm organization, Question: Dire D...

Question: Dire Dawa Food Complex Share Company is producing and marketing different food complexes to local as well as international markets. It is famous and well known whose

Marketing research, Marketing Research Marketing  research,  one  of  ...

Marketing Research Marketing  research,  one  of  the  components  of  an  information  system,  include collecting information relevant to a particular marketing problem faci

Case study, Present the facts of the case study about snickers achieving pr...

Present the facts of the case study about snickers achieving promotional integretion with a universal appeal

Conditional probability, What is Conditional Probability? Two events A ...

What is Conditional Probability? Two events A and B are said to be dependent when  B  can occur only when A is known to have occurred (or vice versa). The probability attached

Concept of rules and discretionary central banking policies, Question 1: ...

Question 1: (a) Clearly explain the concept of rules versus discretionary central banking policies. (b) Discuss the various risks faced by the financial system and disc

Factors affecting overall marketing strategies, Factors affecting overall m...

Factors affecting overall marketing strategies : 1.       Competitors counter moves: this differ with the various marketing inputs. Most competitors can easily and quickly mat

Discuss the principles of market skimming, Question 1: a) What are the...

Question 1: a) What are the evaluative criteria marketing management can use to assess the usefulness of marketing segmentation variables? b) Explain how ‘organisational

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