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Therefore, there would be less demand from the advertisers.
2. Qd = 30 – 0.0002P +26V
a. The price should charge at $140,000; 28 minutes will be sold; and the total revenue will be $3,920,000.
b. If due to PVRs the number of expected viewer falls to 0.5 million, the quantity demand will decrease from 28 to 15.
Qd = 30 – (0.0002 x 140,000) + (26 x 0.5) = 15
Eviewers = ?Q/ (Q1+Q2)/2 / ?V/ (V1+V2)/2 = 15% / 16.7% = 0.9
That means the elasticity of viewers is inelastic. The decrease in number of viewers will results in the decrease in demand of advertising.
3. As more viewers begin using PVRs, the revenues of the major networks will most likely decrease...
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