Answer to Question #5669 in Microeconomics for Bethany Pahl

Question

The following problem is solved below. I am having trouble with the easy part which is solving for B. Can you show me the step by step actions to solve for B or how you combine the terms properly. Thanks.

max E(Profit) = g•[b•30 + (1-b)•10] + (1-g)•[b•20 + (1-b)•40]
g

FOC
b*30 + 1-b *10 -b*20-(1-b)*40=0 How do I do the algebra!

Solve FOC for b:

b = 0.75

Thus, (1-b) = 1 - 0.75 = 0.25