Rona Barrett is starting her own subscription TV channel based on Hollywood gossip called The Daily Scoop. The demand for subscriptions depends on the monthly subscription price and the number of minutes of fresh gossip reported each month, . The quantity of subscriptions will be

Q = 3.888G ^ (0.5p-3)

It costs $4 to produce an hour of fresh scandal for televising. In addition, it costs $2 per month to acquire a subscriber and maintain their account. The total cost of producing hours of gossip and maintaining subscribers is 4 + 2.

1) What is the price elasticity of demand for The Daily Scoop?

2) Recall that = [1 + 1/e]. Rona will pick the subscription price so that the marginal revenue of another subscriber equals the marginal cost. What will Rona set the subscription price at?

3) At the profit-maximizing subscription price found in question 2), write an expression for the number of subscribers as a function of , () = ?

4) Assuming Rona charges the price found in question 2), write out an expression for profit as a function of and .