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.