Ms aura is a psychic the demand for her services is given

Reference no: EM13379285

Ms. Aura is a psychic. The demand for her services is given by Q = 2,000 - 10P, where Q is the number of one-hour sessions per year and P is the price of each session. Her marginal revenue is MR = 200 - 0.2Q. Ms. Aura's operation has no xed costs, but she incurs a cost of $150 per session
(going to the client's house).

a. What is Ms. Aura's yearly prot?

b. Suppose Ms. Aura becomes famous after appearing on the Psychic Network. The new demand for her services is Q = 2500 - 5P. Her new marginal revenue is MR = 500 - 0.4Q. What is her prot now?

c. Advances in telecommunications and information technology revolutionize the way Ms. Aura does business. She begins to use the Internet to nd all relevant information about clients and meets many clients through teleconferencing. The new technology introduces an annual xed cost of $1,000, but the marginal cost is only $20 per session. What is Ms. Aura's prot? Assume the demand curve is still given by Q = 2500 - 5P.

d. Summarize the lesson of this problem for the superstar phenomenon.

Reference no: EM13379285

Questions Cloud

Investing 2000000 in tqms channel support systems : investing 2000000 in tqms channel support systems initiative will at a minimum increase demand for your products 3.0 in

President obama recently agreed in december with : president obama recently agreed in december with republicans in congress to extend existing tax cuts that were

David ortiz motors has a target capital structure of 40 : david ortiz motors has a target capital structure of 40 percent debt and 60 percent equity. the yield to maturity on

Hook industries captial structure consists solely of debt : hook industries captial structure consists solely of debt and common equity. it can issue debt at rd 9 and its common

Ms aura is a psychic the demand for her services is given : ms. aura is a psychic. the demand for her services is given by q 2000 - 10p where q is the number of one-hour

Mckenna sports authority is getting ready to produce a new : mckenna sports authority is getting ready to produce a new line of gold clubs by investing 1.85 million. the investment

1 build a balanced scorecard for the unit of the : 1. build a balanced scorecard for the unit of the organization for which you work or have worked. unless you are in

1 show what happens to producer surplus worker surplus and : 1. show what happens to producer surplus worker surplus and the gains from trade as workers migrate from a low- wage to

In 2007pxox ltd earned a net profit of 45000000 yuan and : in 2007pxox ltd earned a net profit of 45000000 yuan and paid a cash dividend of 16200000 yuan. in 2008 its net profit

User Account

All Pages