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You are a theater owner fortunate enough to book a summer box office hit into your single theater. You are now planning the length of

You are a theater owner fortunate enough to book a summer box office hit into your single theater. You are now planning the length of its run. Your share of the film's projected box office is R = 10w - .25w2, where R is in thousands of dollars and w is the number of weeks that the movie runs. The average operating cost of your theater is AC = MC = $5 thousand per week.

  1. To maximize your profit, how many weeks should the movie run? What is your profit?
  2. You realize that your typical movie makes an average operating profit of $1.5 thousand per week. How does this affect your decision in part A, if at all? Explain briefly.

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