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Consider a firm's joint choice of price and advertising. The demand for the firms product is given by Q = A P where A is
Consider a firm's joint choice of price and advertising. The demand for the firms product is given by Q = A P where A is amount of advertising, P is the price, and Q is the quantity sold. The cost of production is given by is C(Q) = kQ where k is a constant. The cost of advertising is given by 1 8 A2. a) Set up the firm's profit maximization problem. The choice variables are A and P . b) Take the first order conditions and find the optimal value for A and P
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