Ad Venture is a company that produces advertising video clips. Their supply curve is Qs=-2W+6P, where...

Ad Venture is a company that produces advertising video clips. Their supply curve is Qs=-2W+6P, where W (in 10s) is the hourly wage that the company pays their workers and P (in 1000s) is the ongoing market price for a 1-minute commercial.

A) If the current wage in the video industry is $35 (W=3.5), what is the minimum price that allows Ad Venture to remain in the industry (i.e., to supply a positive number of videos)? Draw the supply curve.

B) If the wage is $35, how much should the market price be so that Ad Venture produces 8 videos?

C) At the price you have determined at point B., how does the number of videos supplied change if the wage decreases to $30? Show this situation in your graph.

Solutions

Expert Solution

Rahul Sunny answered 2 years ago

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