# Discuss how PVRs will affect the demand from advertisers?

## Discuss how PVRs will affect the demand from advertisers?

1. “Discuss how PVRs will affect the demand from advertisers?
2.    Suppose you are in charge of setting the price for commercial advertisements shown during Enemies,a top-network television show. There is a 60-minute slot for the show. However, the running time for the show itself is only 30 minutes. The rest of the time can be sold to other companies to advertise their products or donated for public service announcements.
De-mand for advertising is given by:Qd300.0002P26V where Qdquantity demanded advertising on the show (minutes), The price per minute that you charge for advertising, and Vis the number of viewers expected to watch the advertisements (in millions).
a.All your costs are fixed and your goal is to maximize the total revenue received from selling advertising. Suppose that the expected number of viewers is one million people. What price should you charge? How many minutes of advertising will you sell? What is total revenue?
b. Suppose the price is held constant at the value from part (a). What will happen to the quantity demanded if due to PVRs the number of expected viewers falls to 0.5 million? Calculate the “viewer elasticity” based on the two points. Explain in words what this value means”
3. As more viewers begin using PVRs, what happens to the revenues of the major networks(CBS, NBC, ABC, and FOX)?
4.    Discuss the long-run effects if a significant proportion of the viewers begin adopting these“advertising snipping” systems.
5.    What advice would you give the major commercial networks and producers of programming for these networks as more consumers adopt PVRs?”

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