What is yuen’s profit function, Microeconomics

Assignment Help:

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?

Total demand:

Qd= y*100 = (2-P)*100=200-100P

P= (200-Qd)/100 = 2-.01Qd

revenues= Qd*P = [2 -.01Qd] *Qd

costs = TVC + ad costs = 1*Qd + A

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

 

 


Related Discussions:- What is yuen’s profit function

Capital formation, Capital formation: Growth Economists believe that ...

Capital formation: Growth Economists believe that accumulation of capital is one main source of growth of an economy. Emphasis is given to the accumulation of more capital pe

Subsitution and income effect, subsitution effect dominate tha income effec...

subsitution effect dominate tha income effect in which good case?

International monetary fund, INTERNATIONAL MONETARY FUND: The importan...

INTERNATIONAL MONETARY FUND: The important objectives before the Fund presently are as follows: • To promote international cooperation; • To facilitate the expansion and ba

Economic growth, a.  Referring to the table below and using the "Rule of 70...

a.  Referring to the table below and using the "Rule of 70," comment on long-term changes in the standard of living in the United States?  b.  Would you rather live in the Unite

Utility functions, can you help me answer an economics question

can you help me answer an economics question

IS-LM and AD-AS, Critically appraise the IS-LM and the AD-AS models as anal...

Critically appraise the IS-LM and the AD-AS models as analytical tools in explaining the macro-economy (the business cycle). In preparing your essay, please think about the followi

Whata are the non-renewable resource, How does the approach of someone who ...

How does the approach of someone who has adopted the precautionary principle differ from someone with a blind faith in substitutability, when it comes to a non-renewable resource l

Sources of educational finance, Normal 0 false false false ...

Normal 0 false false false EN-IN X-NONE X-NONE MicrosoftInternetExplorer4

Average fixed costs, how do you find the average fixed costs using total fi...

how do you find the average fixed costs using total fixed costs and total product?

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd