JNU 2010 (q 57)

[vishnu]

Suppose a plant can be used to produce in a day x units of product 1 and y units of product 2 where y=(32-5x)/(10-x), where 32/5>=x<=0.  If the price of product 1 is twice the unit price of product 2, then to maximise total revenue the number if units of x the plant should be used to produce in a day is
a)4
b)5
c)6
d)6.4

how to go about this question?

[aditi5000]

32/5 = 6.4 is the max you can produce of x.. and revenue from x is double that of y... so rationally, you should produce 6.4 of x only.. this gives y = 0... So answer is option d... I think
Does that make any sense ?

[tim]

Aditi cn u pls elaborate more..nt thoroughly convinced..

[aditi5000]

Honestly, this was just a guess.. I'm still not sure of the right answer.. :(

[Sajal]

well i guess if u can just calculate the possible total revenue from the given options,assuming price of second good as the numeraire u'l find the max TR for option D..