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An online news site earns revenue by selling subscriptions at price ps and ads at price pa. For simplicity, assume the site h
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Answer #1

Given

qs=1-ps

or

ps=1-qs

Total Revenue=TR=ps*qs=qs-qs2

Marginal Revenue=dTR/dqs=1-2qs

Set Marginal Revenue=Marginal Cost

1-2qs=0

qs=1/2

ps=1-qs=1-1/2=1/2 ------- optimal price

Total Revenue=ps*qs=(1/2)*(1/2)=0.25

Total Cost=0

Profit=Total Revenue-Total Cost=(1/4)-0=0.25

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