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In: Economics

A company sells only one item with a marginal cost of $3 and there is a...

A company sells only one item with a marginal cost of $3 and there is a 50% probability of getting a high value customer who is willing to pay $8 and a 50% probability of getting a low value customer who is willing to pay $5. What is the expected profit? What about the expected profit if it was an auction? What about if it was an auction with three potential customers? What would be the important things to know to be able to compute the expected profit?

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Rahul Sunny answered 1 year ago
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