1. How many DVDS should be sold to rent per day to maximize profit? Please expla

Question

1. How many DVDS should be sold to rent per day to maximize profit? Please explain 2. What is the economic profit for the firm operating where economic profit is maximized Please explain 3.Will this firm likely continue operating in long run Please explain 4. Explain the impact on this firm and of other firms leaving the market. Whould this action alter your decision made in part c. Please explain Formulas an calculations must be shown with correct answers. Thank you

Explanation / Answer

1. you should sell when P=MC. So 110. (where D=MC) 2. (P-ATC)*units sold = profit. So (3-a little over 5)*110=$220 loss 3. No because they are losing money when they sell. 4. In the long run only firms where ATC>P will continue to sell. It will eventually reach equilibrium of no economic profit though, because of theories about the long run. IE firms move in if positive economic profit, so until it is 0 more will come in.

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