Question

"Revenge of the​ Panthers" becomes a wildly successful movie for Ork Studios. It cost $105 million to​ make, and grossed $360million at the box office worldwide. Its​ star, J.P.​ Cruise, has demanded an additional $18 million fee to star in​ "Revenge of the Panthers​ 2". Factoring in this fee​ increase, and an average drop of​ 30% in revenue for a​ sequel, Ork Studios can expect a profit of

​$______million from this sequel. ​(Enter your response rounded to one decimal​ place.)

Considering the marginal benefit and marginal​ cost, will​ "Revenge of the Panthers​ 2" be made into a​ film? Yes or No

After​ "Revenge of the Panthers​ 2" is​ released, Ork Studios is considering whether to make​ "Revenge of the Panthers​ 3: On the​ Prowl". J.P. Cruise will only agree to star in this movie if it is done in IMAX​ 3-D, which adds an additional $45 million to the cost of making the film. He also demands an additional $20 million to star in this film​ (above what he was paid for Revenge of the Panthers​ 2).

Factoring in these increased costs and a drop of​ 30% in revenue from the first​ sequel, the profit of producing​ "Revenge of the Panthers​ 3: On the​ Prowl" is

​$____ million. ​(Enter your response rounded to one decimal place and include a minus sign if​ necessary.)

Considering the marginal benefit and marginal​ cost, will​ "Revenge of the Panthers​ 3: On the​ Prowl" be made into a​ film?

Answer 1

Answer: Ork Studios can expect a profit of $ 129 million from the "Return of Panther 2".

Calculation:

Initial cost (Return of the Panther) =$105 million.

Revenue=$360 million.

Cost of sequel=$105 million+$18 million=$123 million

Revenue=$360million-30% of $360 million=$360 million-$108 million=$252 million.

Profit=Revenue-Cost=$252 million-$123 million=$129 million.

Marginal benefit is more than Marginal cost. So, YES "Revenge of Panthers 2" should be made into a film. YES

Ork Studios can expect a profit of $ 64 million from the sequel "Return of panther 3".

Calculation:

Initial cost (Return of the Panther) =$105 million.

Revenue=$360 million.

Cost of sequel=$105 million+$18 million+$45 million+$20 million=$188 million

Revenue=$360million-30% of $360 million=$360 million-$108 million=$252 million.

Profit=Revenue-Cost=$252 million-$188 million=$64 million.

Marginal benefit is more than Marginal cost. So, YES "Revenge of Panthers 3" should be made into a film. YES