Problem 1. You have estimated demand for the Sand Hill Journal Online to be different for Stanford students and venture capitalists on Sand Hill Road. You are proud of having come up with the demand functions and go in to visit with your CEO. You present the following demand functions:
Demand of Stanford students: QS = 100 - P
Demand of venture capitalists: QV = 300 - 2P
Instead of congratulating you and sending you on your way, she immediately asks you the following questions. Assume that the cost function is TC = 9,000 + 10Q
(Qualitative answer.) You suddenly realize that your demand estimates might have some uncertainty in them. How might you change the amount of surplus you give to the two types because of this?