Determine the profit function and profit maximizing value, Microeconomics

Yuen, a travelling salesman for snake oil, can produce the stuff at a marginal cost of 1. There are 100 potential customers in Vernon, each of whom has the following demand function for snake oil: P = 2 - y. The trouble is that none of the customers have any idea that Yuen is in town. The solution to his problem is, of course, advertising. The local radio station has explained to Yuen that their research shows that the probability that his message gets through to any one of the customers is [1 - 1/(1+A)], where A is the amount he spends on radio advertising.

a. What is Yuen's profit function?

b. What are the profit maximizing values of P and A?

Posted Date: 3/6/2013 2:59:02 AM | Location : United States







Related Discussions:- Determine the profit function and profit maximizing value, Assignment Help, Ask Question on Determine the profit function and profit maximizing value, Get Answer, Expert's Help, Determine the profit function and profit maximizing value Discussions

Write discussion on Determine the profit function and profit maximizing value
Your posts are moderated
Related Questions

Natural Rate of Unemployment: According to neoclassical economics, wage rate is determined by a process of labour-market clearing (in which employers and workers compete with each

Income Elasticity of Demand is described below: Income elasticity of demand is the percentage change in the quantity demanded/required with respect to the percentage change in

What determines aggregate demand?

Transport Infrastructure: The development of transport infrastructure plays an important role in the growth process through increasing mobility of resources and increasing fac

draw the following diagrams and explain their shapes: the production possibilities frontier a demand curve the demand curve for a firm in perfect competition the demand curve for a

The demand curve for oranges is given by the equation P = 5 - Q/200. The supply curve is given by P = Q/800. Q is measured in oranges per day and price is measured in dollars per o


a. Using the data in the tables below, graph on the grid the demand and supply curves for milk, assuming that all factors other than the price of milk are held constant.  Connect a

REAL VERSUS NOMINAL PRICES • Nominal price is a complete or current dollar price of a good or service when it is sold. • Real price is the price related to a combined me