Question

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

Answer 1

Answer:

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