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
John has a utility function given by U(M) = M0.5, where M represents an amount of cash prize in a game. If John wins, with the probability of 0.2, he will get $900; otherwise, he g

What are the basic questions to be answered by economic institution? Four fundamental questions should be answered by any economic institution as: a. What goods and services

In this assignment you will apply consumer choice theory and marginal analysis to business problems. Consider each of the following products and services: a pair of tickets to a s

The very name of this market type suggests that it is a combination of the monopoly and competitive firms. The characteristics of such a market are: 1. There exists large n

Terms of Trade: The ratio of average price of a country's exports, to average price of its imports, is its terms of trade. Theoretically an improvement in a country's terms of trad

Should the bank not have anyone to lend the demand deposit to (like that will ever happen) would the size of the money multiplier decrease? If so, why?

Draw an indifference curve for consumption and hours of work. (Hint: in class we discussed indifference curves for consumption and hours of leisure, this is different.)

The East Asian Miracle However the set of extraordinarily successful economies isn't limited to the set of original OECD economies. Economies of the East Asian miracle have ove

The price of milk is usually much less expensive in a grocery store versus a convenience store. Using economic terminology, explain why people purchase milk at convenience stores.

Briefly discuss the components of macroeconomics system with suitable explanation