Presume a firm is considering two dissimilar activates X and Y, which yield the total benefits presented in the schedule below. The price of X is $2 per unit and the price of Y is $10 per unit.
The firm places a budget constraint of $26 on expenditures on activates X and Y. What are the levels of X and Y that maximize total benefit subject to the budget constraint?
What is the total benefit associated with the optimal levels of X and Y in part a?
Now let the budget constraint increase to $58. What are the optimal levels of X and Y now? What is the total benefit when the budget constraint so $58?