A Local Video Store Estimates Its Average Customer's Demand Per

question 48

Multiple Choice

A local video store estimates its average customer's demand per year is Q = 7 − 2P,and it knows the marginal cost of each rental is $0.5.What is the annual profit that the video store expects to make on an average customer if it engages in optimal two-part pricing?

• A) $6
• B) $7
• C) $8
• D) $9

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Definitions:

Cash Sale

A transaction in which goods or services are exchanged for immediate payment in cash or its equivalent.

Sale of Receivables

Sale of Receivables involves a company selling its outstanding invoices to a third party to receive immediate payment, typically at a discount.

Financial Difficulty

A situation where an individual or organization struggles to meet financial obligations.

Operating Needs

The essential requirements necessary for a business to maintain and grow its operations, including working capital, equipment, and inventory.