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
CRITIQUE OF ECONOMIC REFORMS: The critique of economic reforms should consider the actual growth rate achieved, its impact on employment and poverty reduction, its impact on l

What actions could a government take in order to keep the price above market equilibrium? There are four basic possibilities here; 1) Minimum price;  2) A tax on the good

Problem 1: Any development strategy should put people first; indeed, its very effectiveness should be measured in terms of how it impacts the poor. (a) Describe the link bet

Private benefit and social benefit: Bridge the gab between private cost and social cost, and private benefit and social benefit.Under perfect market, there may be a divergence

GOVERNMENT FINANCE: UNION  AND STATES: The fiscal position of the Governments - both Centre and States - has been under stress since the mid-1980s. The stress stems from the i

what is marginal costs?

Fixed input and variable input: A fixed input is that input whose quantity cannot be varied in the short-run when demand conditions require an increase or a decrease in produc

How might you determine whether flute-playing ability is a highly heritable trait? If you want to improve your flute playing and someone tells you that musical ability is heritable

what is Scitovsky Contour ?

Problem 1 (a) Explain the evolution of exchange rate system in Mauritius. (b) According to you, what factors determine exchange rates in the long run? Problem 2 "Inf