Consider the following profit function has been obtained from technology that uses single input.
π(P, W)=P²W^B , were P is the output price and W is input price and B is bitter parameter value.
a) For which value of bitter parameter the profit function of the product and demand for inout.
1 answer
The value of the bitter parameter that will maximize the profit function and demand for input will depend on the specific market conditions. Generally, a higher value of the bitter parameter will lead to higher profits, but it may also lead to a decrease in demand for the input.