Find the buyer''s marginal profit and set it equal to zero

Assignment Help Microeconomics
Reference no: EM13880211

A buyer has value vb for a potential acquisition and believes the seller's reservation price has the cumulative probability distribution F(v). The buyer chooses P to maximize its expected profit:

1rb = (vb - P)Pr(P accepted) = (vb - P)F(P).

Find the buyer's marginal profit and set it equal to zero. Show that the buyer's optimal price satisfies P = vb - F(P)/f(p), where f(v) = dF(v)/dv is the associated density function. Note that the buyer shades down its value in making its optimal bid.

Reference no: EM13880211

Questions Cloud

Calculate the expected rate of return for each stock : Calculate the expected rate of return for each stock separately and calculate the expected rate of return for the portfolio.
Who do you believe has the stronger argument greyson or arc : Who do you believe has the stronger argument, Greyson or Arc? Why? If you were the judge hearing this case, how would you decide? Why?
What stages of relationship development : For this assignment you will be viewing the movie "Marty" and analyzing it according to various communication principles we have discussed this semester.  The goal of the paper is not to write a summary or 'book report' of what happened in the movie;..
What computer assisted audit technique would be effective : What computer assisted audit technique would be effective in helping Draker determine whether Plait vendor database had actually been falsified?
Find the buyer''s marginal profit and set it equal to zero : Find the buyer's marginal profit and set it equal to zero. Show that the buyer's optimal price satisfies P = vb - F(P)/f(p), where f(v) = dF(v)/dv is the associated density function. Note that the buyer shades down its value in making its optimal ..
Analyze the types of challenges companies face : Analyze the types of challenges companies face in managing their channels and determine which is the most difficult to address
Who has the stronger argument alden or jasons children : Who has the stronger argument, Alden or Jason's children? Why? If you were the judge or jury hearing this case, for whom would you decide? Why?
What method would u apply for a cup of tea : Suppose you r making some tea,and have boiled water and added leaves to the water.Then you realize you cannot find the strainer.
The actual time period the novel is set in : Because Toni Morrison wrote Beloved in the 1970s how is the racial tensions of that time superimposed over the struggles faced by slaves and ex-slaves in the actual time period the novel is set in?

Reviews

Write a Review

Microeconomics Questions & Answers

  What circumstances will input choice be relatively similar

A Company operates plants in both the US (where capital is relatively cheap and labor is relatively expensive) & Mexico (where labor is relatively cheap and capital is relatively expensive). Under what circumstances will the input choice be relativ..

  Research suggested at the time of passage

Research suggested at the time of passage that the reduced speed limit could be credited with saving 7,466 lives per year, reducing fuel use by 3.4 billion gallons of gasoline per year, and reducing injuries by 198,000 per year. The same researchers ..

  Who gains and who loses from a tariff

Who gains and who loses from a tariff? How do the effects of tariffs differ from the effects of quotas? If you were a small country, what would you rather utilize?

  Determining pricing problem

Assume a manager of a profitable department store you're confronted with the pricing problem. You've two types of customers

  How do concepts of macroeconomics help you understand

writenbsp700 - 1050-wordpaper of no more than summarizing the content. address the followingnbspidentify two

  Describe using the definition why you know it is not pareto

an economy is currently made up of a firm that produces bread a firm that produces butter and a consumer who consumes

  Is it possible to college professor to receive economic rent

Is it possible for a college professor to receive economic rent If so, how would the amount of economic be measured Note that economic rent in the labor market is sometimes referred to as quasi-rent in order to distinguish it from the return that ..

  Why mutual funds are attractive investment opportunity

How would you use the information you have learned in this class to develop your own investment portfolio What investments would you hold, in what proportions, and why What is your level of risk aversion

  Compare the equilibrium price and quantity of consumer

Compare the equilibrium price and quantity of consumer loans before and after the Truth in Lending Simplification Act.

  Suppose that spending 80 on advertising will attract 100

a monopolist has two types of customers. there are 100 of type a who will each pay up to 10 for a single unit of the

  The world cup and its economic effect this essay will talk

the world cup and its economic effect. this essay will talk about the 2014 world cup and about the advantages and

  Equilibrium price-physiotherapy

The equilibrium price for physiotherapy visits is $30 and the quantity utilized is 150 visits as a result of the demand and supply conditions in this diagram.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd