Problem
Suppose a firm is considering two different activities, X and Y, which yield the total benefits presented in the schedule below. The price of X is exist2 per unit, and the price of Y is exist10 per unit.
a. The firm places a budget constraint of exist26 on expenditures on activities X and Y. What are the levels of X and Y that maximize total benefit subject to the budget constraint?
b. What is the total benefit associated with the optimal levels of X and Y in part a?
c. Now let the budget constraint increase to exist58. What are the optimal levels of X and Y now? What is the total benefit when the budget constraint is exist58?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.