What is the maximum amount the company is willing

Reference no: EM13201986

Assume that a monopolist considering to spend 500.000 usd on large campaign to promote the their products.
The demand curves are defined by
p = 150 - 3q, where q is the output-quantity in 1000-usd. By executing the campaign the firm expects the new demand-curves to be
p = 400 - 4q.
Their total cost are c(q) = 30q, and the 500.000 usd are not included in this.

a) If the expectations regarding the demand-curves are correct, is it beneficial for the company to do the campaign?

b) What is the maximum amount the company is willing to in their campaign?

Reference no: EM13201986

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