Walter Economics is a “one man shop” economic consulting firm. Walter provides economic consulting services to multinational corporations and…
1.Walter Economics is a “one man shop” economic consulting firm. Walter provides economic consulting services to multinational corporations and charges them an hourly rate for his services. In order to attract business Walter must purchase advertisement in professional trade publications. Walter finds that the marginal benefit of each additional advertisement is:
MB(A) = 60,000 / A,
where A is the number of advertisements that Walter publishes each week.
a.Suppose that the cost of an advertisement is $30,000. How many advertisements should Walter purchase?
b.Suppose that the cost of an advertisement is $20,000. How many advertisements should Walter purchase?
c.Suppose that the cost of an advertisement is $15,000. How many advertisements should Walter purchase?
d.Suppose that the cost of an advertisement is $11,000. How many advertisements should Walter purchase?
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