微观经济学问题求助!# Economics - 经济
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I came across a question in my research: Market demand D(p)=a*p^(-b), where
a is constant, b is price elasticity (constant), p is the price (decision
variable).To maximize profit L=(p-c)*D(p), we know the optimal p=bc/(b-1).
Substituting p=bc/(b-1) into L, we have L as function of b and c.Question:
How L change with regard to b and c. I got a weird result: if bc>(b-1), L
decreases with regard to b.
Thank you very much for your help!
a is constant, b is price elasticity (constant), p is the price (decision
variable).To maximize profit L=(p-c)*D(p), we know the optimal p=bc/(b-1).
Substituting p=bc/(b-1) into L, we have L as function of b and c.Question:
How L change with regard to b and c. I got a weird result: if bc>(b-1), L
decreases with regard to b.
Thank you very much for your help!