Expect interior vs corner solution for optimization problem

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Reference no: EM131238759

Maria’s utility for yoga classes (y) and spin classes (x) are as follows:

u = 2xy + 3x + 4y

Maria lives in Clarksville, Austin where things are expensive: yoga classes cost $10 and a spinclasses cost $14 each. Her monthly budget to spend on yoga and spin classes are $400.

a. Carefully state Maria’s optimization problem, stating the constraints.

b. Determine whether you expect an interior vs corner solution for her optimization problem, by sketching a few utility curves. Explain.

c. State the optimality condition, and find the number of yoga versus spin classes thatoptimize Maria’s utility given the budget constraint. Show your optimal point on thegraph.

Reference no: EM131238759

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