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BF's staff budget for the coming year is $1,200,000. Annual employment costs are $30,000 for each social worker staff member (S) and $60,000 for each medical staff member (M).
(a) Using the Lagrangean multiplier approach calculate the optimal (i.e., service maximizing) combination of medical and social worker staff. Determine the optimal amount of service provided by BF.
(b) Calculate BF's marginal cost. Explain your answer.
(c) Using Excel-Solver verify your answer to (a). (Show your work. Show the spreadsheets in detail. Show the Solver window embedded on the relevant worksheet so that the commands in the Solver window become directly visible and are linked to the cells of the worksheet. To show the solver window, use print screen command on your key board and then MS Word document using paste.
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