Thread: Help with economics question :)

Hi guys,
I wasnt sure how to draw up this table. I know that
total revenue= price x quantity
However Im having troubles with how to start off drawing the table. i.e what figures to use for this question. any help would be appreciated

Question:
Assume that children’s advocates have been successful in imposing restrictions on the amount of commercials for junk food that can be aired during children's television shows. In fact, the restrictions have initially reduced the quantity of advertising allowed during children's viewing hours by 33 percent. In the months following the restrictions, the price of a minute of advertising on network television increased by approximately 14 percent.

What impact do you think this situation has had on the total revenues of the television networks?

For explanatory purposes here is a very long winded answer:

Suppose that the starting sales volume is X, and the starting price is P.
Starting Revenue: XP

You are told that the new sales volume = (2/3) * X
You are told that the new sales price = 1.14P
So the New total revenue is (2/3)*1.14 * XP = 0.76XP


If the new revenue is 0.76XP, and the starting revenue is XP.....the percentage change in revenue is



As you get experienced, you may be able to do these with much less working. eg, note that revenue is proprtional to volume and price. So there is a 33.3333% drop followed by a 14% increase. overall Change = (2/3)*(1.14) - 1.

Hi SpringFan 25,

Thanks heaps for your prompt reply