5) Suppose the number of users (i.e. total quantity demanded) for a great new online meeting space (GNOMS) is: n = 900 – p + yn° where y e (0,1), nº is the expected network size, p is the price. a) Assume y = 0.5 and the users accurately anticipate n° so that n = n°, and the marginal cost per user is 0. What is the profit maximising price? ( b) Suppose GNOMS have an investment opportunity to acquire a start-up that can increase the parameter y from 0.5 to 0.9. What is the maximum amount GNOMS should be willing to pay for this acquisition? (

5) Suppose the number of users (i.e. total quantity demanded) for a great new online meeting space (GNOMS) is: n = 900 – p + yn° where y e (0,1), nº is the expected network size, p is the price. a) Assume y = 0.5 and the users accurately anticipate n° so that n = n°, and the marginal cost per user is 0. What is the profit maximising price? ( b) Suppose GNOMS have an investment opportunity to acquire a start-up that can increase the parameter y from 0.5 to 0.9. What is the maximum amount GNOMS should be willing to pay for this acquisition? (

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter9: Applications Of Cost Theory

Section: Chapter Questions

Problem 2.5CE

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