136k views
5 votes
In a bilateral (two sided) market, the company a. must maximize profits in each market b. will maximize marginal costs and marginal benefits in each market separately c. will take a loss on one side if the benefits are large enough on the other d. will split into two separate companies for the greatest producer surplus

1 Answer

7 votes

In a bilateral (two-sided) market, the company must maximize profits in each market. The correct option is a. must maximize profits in each market.What is a bilateral (two-sided) market?A two-sided market is an intermediary platform that connects two distinct groups of customers to each other. Customers on one side, such as advertisers, pay the intermediary to access the other side's customers. The intermediary, such as a newspaper or Uber, provides the platform, transactions, and infrastructure that connects the two sides.What is profit maximization?Profit maximization occurs when a business's sales revenue is greater than its total expenses, resulting in the maximum possible profit. Profit maximization necessitates the efficient usage of resources to boost production, which results in increased sales and profits. Profit maximization can be achieved by selling more products at a higher price than it costs to produce them. Hence, in a bilateral (two-sided) market, the company must maximize profits in each market to achieve its objectives.

User Mementototem
by
8.2k points

Related questions

asked Nov 18, 2024 142k views
HattrickNZ asked Nov 18, 2024
by HattrickNZ
8.6k points
1 answer
0 votes
142k views
1 answer
2 votes
61.7k views
Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.

9.4m questions

12.2m answers

Categories