A single-price monopolist faces an inverse demand function of: P(Q,B)=100−Q+B0.5, where Q is the quantity, P is the price, and B is the level of advertising. The marginal cost is a constant $10 per unit, the cost per unit of advertising is $1, and there are no fixed costs. Solve for the firm's profit-maximizing price, quantity, and level of advertising. Hint: the profit function must be maximized with respect to two choice variables (Q and B). The profit-maximizing quantity is -------? units. (round your answer to two decimal places) The profit-maximizing level of advertising is----------? units. (round your answer to two decimal places) The profit-maximizing price is-----? (round your answer to two decimal places)
A single-
where Q is the quantity, P is the price, and B is the level of advertising. The marginal cost is a constant $10 per unit, the cost per unit of advertising is $1, and there are no fixed costs.
Solve for the firm's profit-maximizing price, quantity, and level of advertising.
Hint: the profit function must be maximized with respect to two choice variables (Q and B).
The profit-maximizing quantity is -------? units. (round your answer to two decimal places)
The profit-maximizing level of advertising is----------? units. (round your answer to two decimal places)
The profit-maximizing price is-----? (round your answer to two decimal places)
Step by step
Solved in 5 steps
