A Video Rental Store Has Two Video Cameras Available for Customers

question 21

Essay

A video rental store has two video cameras available for customers to rent.Historically,demand for cameras has followed this distribution.The revenue per rental is $40.If a customer wants a camera and none is available,the store gives a $15 coupon for snacks.
$$\begin{array} { l l l l } \text { Demand } & \text { Relative Frequency } & \text { Revenue } & \text { Cost } \\\hline 0 & .35 & 0 & 0 \\1 & .30 & 40 & 0 \\2 & .20 & 80 & 0 \\3 & .10 & 80 & 15 \\4 & .05 & 80 & 30\end{array}$$
a.What is the expected demand for camera rentals?
b.What is the expected revenue from camera rentals?
c.What is the expected cost associated with camera rentals?
d.What is the expected profit from camera rentals?

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Definitions:

Investment

The act of allocating resources, usually money, with the expectation of generating an income or profit, often involving the purchase of stocks, bonds, or real estate.

Interest Rate

is the cost of borrowing money or the compensation for the service and risk of lending money, expressed as a percentage of the amount borrowed.

Wine Drinkers

Individuals or groups who consume wine, not a specific economic term but may be analyzed in market studies related to beverage consumption.

Interest Rate

The rate at which borrowers are charged interest for the money they lend from a creditor.