One of the worst movies ever made was a film called Waterworld. The film was set in a future world in which ice caps have melted and water covers the Earth. Kevin Costner stars as The Mariner, a mutant who can breathe under water. His job is to protect a young girl who has what may be a map of dry land tattooed on her back; an evil gang riding Jet Skis is trying to kidnap her to get the map. The first thing the film’s producers did was pay Kevin Costner $14 million to star in the film. Then they started actual filming, and things went wrong very quickly. The movie was filmed almost entirely on and under water – many in the crew became seasick each day, much of the camera equipment did not work well under water, and scenes were taking much longer than expected to shoot. A series of accidents added to the costs and further delayed production. After 6 months of filming, the movie was not quite complete. Producers of the film discussed whether they should just stop everything and walk away, or whether they should continue filming even if there was no way that the film would make a profit. Here is what the situation looked like 6 months after filming began: The producers had spent a total of $140 million They figured that it would cost an additional $35 million to complete filming If they did complete filming and released Waterworld into theaters, they figured they could get $150 million in Total Revenue. We know that the producers decided to complete filming and release it into theaters. Based on the numbers above, did the decision to complete filming make Good Economic Sense? Or would the producers have been better off to just stop production after 6 months and walk away without completing the film? Justify your answer. Be sure to define and explain any relevant concepts you use in your answer.
One of the worst movies ever made was a film called Waterworld. The film was set in a future world in which ice caps have melted and water covers the Earth. Kevin Costner stars as The Mariner, a mutant who can breathe under water. His job is to protect a young girl who has what may be a map of dry land tattooed on her back; an evil gang riding Jet Skis is trying to kidnap her to get the map.
The first thing the film’s producers did was pay Kevin Costner $14 million to star in the film. Then they started actual filming, and things went wrong very quickly. The movie was filmed almost entirely on and under water – many in the crew became seasick each day, much of the camera equipment did not work well under water, and scenes were taking much longer than expected to shoot. A series of accidents added to the costs and further delayed production. After 6 months of filming, the movie was not quite complete. Producers of the film discussed whether they should just stop everything and walk away, or whether they should continue filming even if there was no way that the film would make a profit.
Here is what the situation looked like 6 months after filming began:
- The producers had spent a total of $140 million
- They figured that it would cost an additional $35 million to complete filming
- If they did complete filming and released Waterworld into theaters, they figured they could get $150 million in Total Revenue.
We know that the producers decided to complete filming and release it into theaters. Based on the numbers above, did the decision to complete filming make Good Economic Sense? Or would the producers have been better off to just stop production after 6 months and walk away without completing the film? Justify your answer. Be sure to define and explain any relevant concepts you use in your answer.
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