As Sales Manager for Montevideo Productions, Inc., you are planning to review the prices you charge clients for television advertisement development. You currently charge each client an hourly development fee of $2,400. With this pricing structure, the demand, measured by the number ofcontracts Montevideo signs per month, is 6 contracts. This is down 3 contracts from the figure last year, when your company charged only $2,100.(a) Construct a linear demand equation giving the number of contracts q as a function of the hourly fee p Montevideo charges for development.q(p) =(b) On average, Montevideo bills for 40 hours of production time on each contract. Give a formula for the total revenue obtained by charging $p per hour.R(P) =(c) The costs to Montevideo Productions are estimated as follows.Fixed costs: $110,000 per monthVarlable costs: $50,000 per contractExpress Montevideo Productions' monthly cost as a function of the number q of contracts.C(q) =Express Montevideo Productions' monthly cost as a function of the hourly production charge p.C(p) =(d) Express Montevideo Productions' monthly profit as a function of the hourly development fee p.P(p) =Find the price it should charge to maximize the profit (in dollars per hour).per hourp = $

contracts Montevideo signs per month, is 6 contracts. This is down 3 contracts from the figure last year, when your company charged only $2,100. (a) Construct a linear demand equation giving the number of contracts q as a function of the hourly fee p Montevideo charges for development. q(p) = (b) On average, Montevideo bills for 40 hours f production time on each contract. Give a formula for the total revenue obtained by charging sp per hour. R(P) = (c) The costs to Montevideo Productions are estimated as follows. Fixed costs: $110,000 per month Variable costs: $50,000 per contract Express Montevideo Productions' monthly cost as a function of the number q of contracts. C(q) = Express Montevideo Productions' monthly cost as a function of the hourly production charge p. C(p) = (d) Express Montevideo Productions' monthly profit as a function of the hourly development fee p. P(p) = Find the price it should charge to maximize the profit (in dollars per hour). per hour p=s

contracts Montevideo signs per month, is 6 contracts. This is down 3 contracts from the figure last year, when your company charged only $2,100. (a) Construct a linear demand equation giving the number of contracts q as a function of the hourly fee p Montevideo charges for development. q(p) = (b) On average, Montevideo bills for 40 hours f production time on each contract. Give a formula for the total revenue obtained by charging sp per hour. R(P) = (c) The costs to Montevideo Productions are estimated as follows. Fixed costs: $110,000 per month Variable costs: $50,000 per contract Express Montevideo Productions' monthly cost as a function of the number q of contracts. C(q) = Express Montevideo Productions' monthly cost as a function of the hourly production charge p. C(p) = (d) Express Montevideo Productions' monthly profit as a function of the hourly development fee p. P(p) = Find the price it should charge to maximize the profit (in dollars per hour). per hour p=s

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

As Sales Manager for Montevideo Productions, Inc., you are planning to review the prices you charge clients for television advertisement development. You currently charge each client an hourly development fee of $2,400. With this pricing structure, the demand, measured by the number of
contracts Montevideo signs per month, is 6 contracts. This is down 3 contracts from the figure last year, when your company charged only $2,100.
(a) Construct a linear demand equation giving the number of contracts q as a function of the hourly fee p Montevideo charges for development.
q(p) =
(b) On average, Montevideo bills for 40 hours of production time on each contract. Give a formula for the total revenue obtained by charging $p per hour.
R(P) =
(c) The costs to Montevideo Productions are estimated as follows.
Fixed costs: $110,000 per month
Varlable costs: $50,000 per contract
Express Montevideo Productions' monthly cost as a function of the number q of contracts.
C(q) =
Express Montevideo Productions' monthly cost as a function of the hourly production charge p.
C(p) =
(d) Express Montevideo Productions' monthly profit as a function of the hourly development fee p.
P(p) =
Find the price it should charge to maximize the profit (in dollars per hour).
per hour
p = $

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