Calculate viewer elasticity
Not what you're looking for?
Demand for advertising is given by: Qd = 30 - 0.0002P + 26V
Qd = quantity demanded
P = price per minute
V = number of viewers
All costs are fixed and the goal is to maximize total revenue. Suppose that the number of viewers is 1 million.
What price should you charge?
How many minutes of advertising to sell?
What is total revenue?
Suppose price is held constant. What will happen to the quantity demanded if due to PVR the number expected viewers falls to 0.5 million? Calculate viewer elasticity based on the two points and explain in words what this value means.
Purchase this Solution
Solution Summary
Demand for advertising is explored in this case.
Solution Preview
I think the V is number of viewers in millions. Please check, I am doing the calculations with this, if it is different please make suitables changes in calculations, as know the process.
V= 1 million
Thus, Qd=30-0.0002P+26*1 = 56-0.0002P
Reversing the equation we have
0.0002P = 56-Qd
P=280,000 - 5000Qd
Total Revenues (TR) = P*Qd = ...
Purchase this Solution
Free BrainMass Quizzes
Pricing Strategies
Discussion about various pricing techniques of profit-seeking firms.
Elementary Microeconomics
This quiz reviews the basic concept of supply and demand analysis.
Economics, Basic Concepts, Demand-Supply-Equilibrium
The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.
Economic Issues and Concepts
This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.
Basics of Economics
Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.