I really need someone that is good and can do this correct Thank you for the hel
ID: 1234482 • Letter: I
Question
I really need someone that is good and can do this correct Thank you for the help
i have put this many times on chegg and i have got so many different ones i am confused
How many DVDs should be sold to rent per day to maximize profit? Briefly explain your answer.
B. What is the economic profit for this firm operating where economic profit is maximized?
C. Will this firm likely continue operating in the long run? Briefly explain your answer.
D. Explain the impact on this firm of other firms leaving the market. Would this action alter your decision made in part C?
150 to 250 words that contains all answers.
Explanation / Answer
A. Profit maximizes where MR = MC, so quantity will be = 55 B. So at that point price/ Demand will be = 4.50 which Average total cost ( ATC) will be= 5.50 Due to the fact that ATC is above Demand curve firm will be minimizing loss ( profit maximizing) by (Price - ATC) * (Quantity) = (4.50 - 5.50) * 55 = -55 C. Although the firm in the short run is not able to make profits but is maximizing their costs, they should not stop production in the short run as they are covering their variable costs. If the same situation persists then the firm has two choices to make. One wait for other firms to leave the market so that the demand of their product increases or if they can not bear more losses then to leave this industry and to find another industry which has economic or accounting profits. D.Yes, this will alter our decision in C as other firms working in this industry will leave, they will leave behind the demand which can be obtained fully or to some portion by our firm , and that can result in demand to further increase and ATC to decrease resulting in economic or accounting profits. If you have any query regarding this question uptill now then please post your question in the comment box and I would happily solve them :)