(ou are the CEO of a brand-new dating app (BNDA). The number of users (i.e. total quantity demanded) for BNDA is: n = 1200 – p + ynº where y e (0,1), nº is the expected network size, p is the price. ) Interpret the parameter y. What strategies can you use for a company like BNDA to increase the value of y? (* >) Assume per user is 0. What is the profit maximising price? 0.4 and the users accurately anticipate nº so that n = nº, and the marginal cost :)Suppose BnDA have an investment opportunity to acquire a start-up that can increase the parameter y from 0.4 to 0.9. What is the maximum amount BNDA should be willing to pay for this acquisition? (:
(ou are the CEO of a brand-new dating app (BNDA). The number of users (i.e. total quantity demanded) for BNDA is: n = 1200 – p + ynº where y e (0,1), nº is the expected network size, p is the price. ) Interpret the parameter y. What strategies can you use for a company like BNDA to increase the value of y? (* >) Assume per user is 0. What is the profit maximising price? 0.4 and the users accurately anticipate nº so that n = nº, and the marginal cost :)Suppose BnDA have an investment opportunity to acquire a start-up that can increase the parameter y from 0.4 to 0.9. What is the maximum amount BNDA should be willing to pay for this acquisition? (:
Chapter1: Making Economics Decisions
Section: Chapter Questions
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Transcribed Image Text:You are the CEO of a brand-new dating app (BNDA). The number of users (i.e. total quantity
demanded) for BNDA is:
n = 1200 – p +ynº where y E (0,1), nº is the expected network size,p is the price.
a) Interpret the parameter y. What strategies can you use for a company like BNDA to increase
the value of y? (·
0.4 and the users accurately anticipate nº so that n = nº, and the marginal cost
b) Assume y
per user is 0. What is the profit maximising price?
c) Suppose BnDA have an investment opportunity to acquire a start-up that can increase the
parameter y from 0.4 to 0.9. What is the maximum amount BNDA should be willing to pay for
this acquisition? (*
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