American movie producers could afford to sell films cheaply in europe during the 1920s because

Because most foreign income was pure profit.

In the 1920s, the competition of American cinema was very strong for European film producers, since a single country and its films could not compete with the United States (Hollywood), which had around fifteen thousand theaters, becoming the most powerful filmmaker company in the world, at the time. American producers had huge and safe profits, so they could sell their films cheaply in Europe because their overseas earnings were plentiful. This led many European film producers and critics to think that if all the filmmakers from the European countries were united, they would create a market that could finally compete with the United States.