Question

can sombody please help with this

HW W1-1. Section 2.1 Exercise 42. Television Advertising As sales manager for Montevideo Productions, Inc., you are planning to review the price you charge clients for television advertisement development. You currently charge each client an hourly development fee of $2,500. With this pricing structure, the demand, measured by the number of contracts Montevideo signs per month, is 15 contracts. This is down 5 contracts from the figure last year, when your company charged only $2,000. 36a. Construct a linear demand equation giving the number of contracts q as a function of the hourly fee p Montevideo charges for development. 36b. On average, Montevideo bills for 50 hours of production time on each contract. Give a formula for the total revenue obtained by charging $p per hour. 36c. The costs to Montevideo Productions are estimated as follows: Fixed Costs: $120,000 per month Variable Costs: $80,000 per contract Express Montevideo Productions' monthly cost, (1) as a function of the number 4 of contracts (ii) as a function of the hourly production charge p. 36d. Express Montevideo Productions' monthly profit as a function of the hourly development fee p and hence find the price it should charge to maximize the profit.

Answer 1

Answer 36 a) p is the price and q is the number of contracts.

given (p, q) = (2500, 15) and (2000, 20)

Slope ,

m = - 92 - 91 P2 - P 20 – 15 2000 - 2500 - 500 = -0.01

q-q₁ = -0.01*(P- P₁)

=>q -15 = -0.01*(P-2500)

=>q = -0.01 P+40.

Answer 36 b) Now,

Answer 36 c

LRP) = q* (50hours of production) * P/hour = (-0.01p + 40) * 50p = -0.05p² + 2000p.

The costs follows:

Fixed costs = $120,000 per month and Variable costs = $80,000 per contract

1)

Clp) = Fixed cost +Variable cost * (number of contract) = 120000+ 80000

2)

C(p) = Fixed cost +Variable cost * (number of contract) = 120000+ 80000(-0.01p+ 40) = 3,320,000 – 800p