Find price to maximize the profitability


You take a position with a large real estate development company as your first job after graduation. Your first big assignment is to sell an office building - you have been informed the company's cost into the building (and the bottom line price it is willing to accept) is $400,000. You have identified a likely buyer and you assess that his top price is either $500,000 with a probability of .3, $600,000 with a probability of .5, or $1,000,000 with a probability of .2. You have to commit to a posted price - what price will maximize your profitability?

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Microeconomics: Find price to maximize the profitability
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