Business, 08.07.2019 22:30, billybob8514
As the manager of smith construction, you need to make a decision on the number of homes to build in a new residential area where you are the only builder. unfortunately, you must build the homes before you learn how strong demand is for homes in this large neighborhood. there is a 60 percent chance of low demand and a 40 percent chance of high demand. the corresponding (inverse) demand functions for these two scenarios are p = 300,000 β 400 q and p = 500,000 β 275q, respectively. your cost function is c(q) = 140,000 + 240,000q. how many new homes should you build, and what profits can you expect?
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