Question
You are the CEO of a brand-new dating app (BnDA). The number of users (i.e. total quantity demanded) for BnDA is: = 1200 + ^
You are the CEO of a brand-new dating app (BnDA). The number of users (i.e. total quantity demanded) for BnDA is: = 1200 + ^ (0,1), ^ , . a) Interpret the parameter . What strategies can you use for a company like BnDA to increase the value of ? (2 marks) b) Assume = 0.4 = , and the marginal cost per user is 0. What is the profit maximising price? (1.5 marks) c)Suppose BnDA have an investment opportunity to acquire a start-up that can increase the parameter 0.4 0.9. What is the maximum amount BnDA should be willing to pay for this acquisition? (1.5 marks)
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