Answer to Question #234550 in Microeconomics for Jaysling

Question

Given the following information below,
a) compute the maximum revenue combinations of products using the maximum revenue criterion (Py2= $2, Py1=$1)

Hake
43, 42, 40, 36, 30, 22, 12, 0
Pilchard
0, 7, 13, 18, 22, 25, 27, 28

b) Draw the relevant graph for this problem and indicate your point of revenue maximisation.

Answer 1

In financial matters, a production function gives the innovative connection between amounts of actual sources of info and amounts of the yield of merchandise. The production function is one of the vital ideas of standard neoclassical hypotheses, used to characterize peripheral items and to recognize allocative effectiveness, a critical focal point of financial aspects. One significant motivation behind the production function is to address allocative productivity in the utilization of considering inputs production and the subsequent circulation of pay to those variables while abstracting away from the innovative issues of accomplishing specialized effectiveness, as a designer or expert director would get it.

(part-a)

Revenue on Hake(i.e Y₁) = PY₁ * Hake  

Revenue on Pilchards(i.e Y₂) = PY₂ * Pilchards

Total Revenue = Revenue on Hake(i.e Y₁) + Revenue on Pilchards(i.e Y₂)

Revenue is maximum for Hake = 30 and Pilchards = 22

Thus, for Hake = 30 and Pilchards = 22, Revenue is maximized.

(part-b)

Revenue is maximized at point E where the bundle combination of goods is: Hake = 30 and Pilchards = 22