Suppose that in addition to repairing your car, you can also spend money advertising.
The benefit of H hours of repair work is:
BR (H) = 220 H - H2.
while the benefit of D dollars of advertising is:
BA (D) = 2D.
The marginal benefit of repair work is:
MBR (H) = 220 - 2H.
while the marginal benefit of advertising is:
MBA(D) = 2
Repair work costs $100 per hour and you have a total of $1,500 to allocate between repair work and advertising.
a. Write down your constrained optimization problem.
b. What is your best choice of repair hours and advertising? Interpret the condition that characterizes your best choice in terms of the marginal benefits and marginal opportunity costs of repair work.