Explore BrainMass
Share

Lagrangian Multipliers

This content was STOLEN from BrainMass.com - View the original, and get the already-completed solution here!

Fixed capital and labor expenses are $1.2 million per year.
Variable expenses average $2,000 per van conversion.
Q=1,000 - 0.1P where Q is the number of van conversions (output) and P is price.
Calculate the profit maximizing output, price and profit levels.

© BrainMass Inc. brainmass.com October 24, 2018, 7:20 pm ad1c9bdddf
https://brainmass.com/economics/principles-of-mathematical-economics/lagrangian-multipliers-64453

Solution Preview

Fixed cost = 1,200,000
Unit Variable cost = 2000
So the cost function is TC = FC + VC = 1200,000 + 2000 Q
Then marginal cost = AVC = 2000

Since Demand is Q ...

Solution Summary

Calculate the profit maximizing output, price and profit levels.

$2.19
See Also This Related BrainMass Solution

Lagrange multipliers method

Considering the surface f(x,y)=xy and the constraint x2+y2=1 , answer to the following questions:

A. Using the Lagrange multipliers method we can obtain some possible maximum and minimum for ?=ï?±1/2
B. The Lagrange multipliers method is the most convenient
C. There are two absolute maximum and two absolute minimum
D. There is only one absolute maximum and one absolute maximum

View Full Posting Details