QUESTION 10YouTube generates revenue by showing ads to consumers who watch videos on its website. Suppose that, for each person watching a video, YouTube receives onedollar in ad revenues (P=1).Arthur is a professional video-game player. He plays the video-game "Fortnite" and uploads his video to YouTube. The number of people who will watch his videodepends on Arthur's effort producing the video and increasing its quality. The number Q of viewers as a function of Arthur's effort "e" is given by the function Q= Be.Arthur's offort cost is 202.His utility equals his income minus ys effort cost.To give incentives to Arthur to create better videos and attract more viewers, YouTube decides to pay Arthur a bonus b for each person watching his video.YouTube also has an operational cost30Operational cost -32which is the cost of maintaining its internet servers and administrative staff. YouTube's profit equals the ad revenue minus the payment to Arthur and the operationalcost. Find the bonus b* that maximizes YouTube's profit.The optimal bonus is b 02

*Answer: answers Arthur has Q=8e viewers and for each viewer he gets b His income= 8eb Cost=…

y equals his income minus s effort cost. incentives to Arthur to create better videos and attract more viewers, YouTube decides to pay Arthur a bonus b for eac e also has an operational cost 30 ational cost= 32 s the cost of maintaining its internet servers and administrative staf. YouTube's profit equals the ad revenue minus the ind the bonus b that maximizes YouTube's profit. timal bonus is b 02

y equals his income minus s effort cost. incentives to Arthur to create better videos and attract more viewers, YouTube decides to pay Arthur a bonus b for eac e also has an operational cost 30 ational cost= 32 s the cost of maintaining its internet servers and administrative staf. YouTube's profit equals the ad revenue minus the ind the bonus b that maximizes YouTube's profit. timal bonus is b 02

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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