Your buddy Joseph wants your advice. He presents you with his utility schedule above and want to know how many units of Product B he should purchase to maximize his utility. He tells you the price of Product A is $4 and the price of Product B is $5. Joseph informs you he only wants to spend a total $27 on both products. How many units of Product B do you tell Joseph to purchase?

He can buy both 3 ( number of ) Products A and B .

Explanation:

Suppose the no of product A bought is x and the number of product B purchased is y .

Then Total Cost would be  4x+  5y= 27 eq 1

As he wants to buy both products he can divide the money equally

1:1.

As the individual cost would be  $4 + $5 = $ 9

Putting  symbols for cost  x+ y= 9 eq 2

Dividing the total  cost by the individual cost would give ( eq1 by eq2)

4x+ 5y/ x+ y= 27/9

4x+ 5y/ x+y= 3

4x + 5y= 3(x+y)

but as 4x + 5y = 27 ( already given)

27= 3 ( x+y)

Meaning 3 number  of both products can be purchased.

Check .

4(3) + 5(3)= 27

$ 12+ $ 15= $27

answer; capital structure decision;