According to http://www.whitehouse.gov/omb/budget/fy2006/tables.html, the U.S. government received approximately $2 trillion in funds during the year 2005. Approximately $1.3 trillion had already been promised to programs such as Medicare and Social Security, leaving approximately $700 billion in "discretionary" funds for budget items like defense and education.
Suppose the Department of Defense required at least $440 billion to function and that the total spending by other government departments (Education, Health and Human Services, Food and Drug Administration, Energy, etc.) was required to be at least $480 billion.
Suppose further that every $100 billion spent on defense increased taxpayer satisfaction by 5% while every $100 billion spent on other services increased satisfaction by 3%.
1. Formulate a linear programming problem to maximize taxpayer satisfaction subject to the constraints on discretionary spending.
2. Graph the constraints as when finding the feasible region
3. Can you find a solution that maximizes taxpayer satisfaction? Why or why not?
Neat and step-wise soltuions are provided. Graph is provided.