You expect one-third of your customers to be high value, willing to pay $9 for your product, and the other two-thirds to be low value customers willing to pay only $3 . You cannot tell them apart. If the product costs $3, and you charge $9, what is your expected profit?
a. $1
b. $2
c. $3
d. $4
b
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Suppose an individual inverse demand curve is given as P = 2 - 1/2 qi, where qi is the quantity demanded by individual i. There are 50 individual consumers with this identical, individual inverse demand curve. Solve for the market demand curve
What will be an ideal response?
Income lost by the unemployed is an example of the ________ cost of unemployment, while the additional spending to control crime is an example of the ________ cost of unemployment.
A. economic; psychological B. social; psychological C. economic; social D. psychological; economic
What is the effect of a country's saving rate on trade deficits?
A. A high savings rate means there is more money available for investment, resulting in greater production and increased international sales which, in turn, leads to lower trade deficits. B. A country's savings rate has no effect on the country's trade deficit. C. A low savings rate means people are spending more than they earn, and that results in increased financial difficulties for consumers, higher interest rates, and fewer international sales, resulting in a decrease in a country's trade deficit. D. A low savings rate means that consumers are buying more, and more buying leads to an increase in a country's trade deficit.
Refer to the table. Over the $8-$6 price range, supply is:
A. inelastic.
B. elastic.
C. perfectly inelastic.
D. perfectly elastic.