Running a Video Store In 7 months: As I told you before, a good friend of mine owned a video store for many years,.. Quantity Total Cost Avg Cost MC MR It was profitable and things were going along well,. As DVDs and new technology came 0 $2000 into play, he found that his business began to suffer,. As a result, he realized that it was 1-1000 $5850 soon going to be time to shut his doors and move on,. All right, we are going to analyze 1001- 2200 $7850 what happened to him during that final year of operation,. At the time, he still had 10 2201 - 3000 $9850 months left on his lease (part of a strip mall)...The lease required a rent of $2000 a month,.. 3001 - 3400 $11850 Also, he had contracts with video wholesalers and suppliers for screeners, maintenance 3401 -3500 $13850 deals, and backorders,.These contracts had another 7 months to go,.These cost him a further $1550 a month,. In running his store, we will assume that his utilities would be $300 (WHEN open), and of course, his labor,. Each employee would be paid $2000 a In 10 months: month,. Now, let us look at the following information,. Suppose you find that for each employee he hires (or keeps hired), his rentals are as follows: Quantity Total Cost Avg Cost MC MR SO 1 Employee - 2200 rentals ($3 a rental) 1-1000 $5850 2 Employee - 3100 rentals 1001- 2200 $7850 3 Employee - 3600 rentals 4 Employee - 3850 rentals 2201 - 3000 $9850 5 Employee - 4000 rentals 3001 -3400 $11850 6 Employee - No affect so no need to consider 3401 -3500 $13850 First question, how many employees would maximize his profit? Second, given this situation, would he be better off shutting his doors? (Remember, if closed, no employee costs, etc ...)...What about in 7 months, should he shut his door? In 10 months? Next, what if he had to drop the price of movie rentals to $2.25 to keep up with Blockbuster, etc ... How many employees should he hire? Should he stay open?. How about in 7 months? 10 months? Quantity Total Cost Avg Cost MC MR $3550 1-1000 $5850 1001- 2200 $7850 2201 - 3000 $9850 3001 - 3400 $11850 3401 -3500 $13850