In real life scenarios, when firms face profit maximizing decisions in the short and long runs, how often are they able to obtain information that is updated enough, and accurate enough for their profit maximizing decision to be the "best" decision for the allocation of the firms resources?© BrainMass Inc. brainmass.com October 25, 2018, 12:01 am ad1c9bdddf
In fact, firms rarely know the exact shape of the demand curve they face. "Imperfect information" is a general term used to describe a situation in which an economic decision-maker does not have all the information it needs to make the best decision.
Firms have several choices in these circumstances. Finding good information is usually a matter of investing time and moeny in pursuing it. Many ...
The following posting discussing the availability of information needed for profit maximization.
Important information about profit maximizing price
A firm is considering building a bridge. The cost to build the bridge is $2 million with no maintenance costs. The following table shows demand for bridge:
Price per crossing # of crossings
a. What is the profit maximizing price?
b. What is the efficient level of output? why?
c. If the firm is interested in maximizing profit, should it build the bridge?
d. If the government was to build the bridge, what price should the government charge?
e. Should the government build the bridge? Why?View Full Posting Details