Question
.In a 1950s small town with a population of 24,000 individuals, a new technology has arrived, broadcast television, and it has a constant marginal cost
.In a 1950s small town with a population of 24,000 individuals, a new technology has arrived, broadcast television, and it has a constant marginal cost of zero. At that time, there was only one station operating in town, and entry was not an immediate threat. The hourly inverse demand from advertisers for minutes (M) of airtime is given by:
p = 10 - 5M + 0.01A,
where A represents the number of viewers. If everyone watches, what is the profit-maximizing number of advertising minutes per hour? (6 pts) What if the station owner noticed that for every additional minute of advertisements, 400 individuals stop turning in? (6 pts) What would be the profit-maximizing amount of minutes per hour in that case? (4 pts) How many people would watch? (4 pts)
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