What is yuen’s profit function, 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?

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?



Posted Date: 8/2/2013 3:19:07 AM | Location : United States

Related Discussions:- What is yuen’s profit function, Assignment Help, Ask Question on What is yuen’s profit function, Get Answer, Expert's Help, What is yuen’s profit function Discussions

Write discussion on What is yuen’s profit function
Your posts are moderated
Related Questions
Use a PPF to explain the difference between actual and potential growth. The PPF shows possible output, taking into consideration all factors of production - but de facto outpu

Homer consumes only donuts and beer. When he consumes less than 10 beers, Homer would gladly drink one more. After drinking 10 beers, Homer is so drunk that he does not notice any

Calculate point elasticity of demand for demand function Q=10-2p for decrease in price from Rs 3 to Rs 2

have to do a group project on consumer equlibrium. plz help on wat sub topics to select (i am in college 1st year)

assumption of mariss model

how can a consumer get maximum Equlbrim

discuss how cross of demand is useful in categorizing commodities

Strategic Planning for Enhancing Exports: Strategic Planning for Enhancing Exports need to be undertaken at the national level. It is necessary  to undertake a separate and

Market-Friendly Reforms: One main shortcoming of present development cooperation is that recipients of development cooperation is that recipients of development finance are d