Half of all potential customers would pay $10 for your product but half would only pay $8 but you cannot tell them apart. Your marginal costs are $4. If you set the price at $8, the expected profit is:a) $3 b) $4 c) $5 d) $6

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26 January, 22:14

Half of all potential customers would pay $10 for your product but half would only pay $8 but you cannot tell them apart. Your marginal costs are $4. If you set the price at $8, the expected profit is:a) $3 b) $4 c) $5 d) $6

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Answers (1)

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Mauricio Hebert · Answer 1

The correct answer is b) $4.

Explanation:

This is simple problem, it requires us to to tell expected profit. We know that profit is equal to revenue minus expense. So in question revenue is given as $ 8 and cost is $ 4. So the profit would be

Profit = Revenue - Cost = 8 - 4 = $ 4