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[Solution Library] Chapter 12: Problems and Applications #2.5, pg. 433. Alicia manages a Hollywood Video store and has the following information on demand

Question: Chapter 12: Problems and Applications #2.5, pg. 433.

Alicia manages a Hollywood Video store and has the following information on demand and costs:

Q P TC
0 6 $3.00
1 5.5 7
2 5 10
3 4.5 12.5
4 4 14.5
5 3.5 16
6 3 17
7 2.5 18.5
8 2 21
  1. To maximize profit, how many DVDs should Alicia rent, what price should she charge, and how much profit will she make?
  2. What is the marginal revenue received by renting the profit-maximizing DVD’s)? What is the marginal cost of renting the profit-maximizing DVD’s)?

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