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GFauxPas

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Help please with a problem from my modelling and optimization class. We're doing 2 variable optimization using Lagrange Multipliers. We're also discussing shadow prices.

The first part of this problem is to maximize profit using the price and advertising budget assumptions and data.

The data and assumptions are things like:

The cost of manufacture is 600 dollars per unit, and the wholesale price is 950 dollars

Other data are that units sold per month is 10 000, maximum advertising budget allowed by management is 100 000 per month.

Here are the data I don't know how to turn into workable function or equations, and could use help please:

In a test market, lowering the price by 100 increased sales by 50%

The advertising agency claims that increasing the advertising budget by 10 000 a month would result in a sales increase of 200 units a month.

How do I use these last data, i.e, how do I write them as equations?

edit: Oh whoops, I posted this in the wrong forum, can someone please move it?

The first part of this problem is to maximize profit using the price and advertising budget assumptions and data.

The data and assumptions are things like:

The cost of manufacture is 600 dollars per unit, and the wholesale price is 950 dollars

Other data are that units sold per month is 10 000, maximum advertising budget allowed by management is 100 000 per month.

Here are the data I don't know how to turn into workable function or equations, and could use help please:

In a test market, lowering the price by 100 increased sales by 50%

The advertising agency claims that increasing the advertising budget by 10 000 a month would result in a sales increase of 200 units a month.

How do I use these last data, i.e, how do I write them as equations?

edit: Oh whoops, I posted this in the wrong forum, can someone please move it?

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