For the operator of a movie theater, the marginal cost (MC) of admitting one more person to the theater is zero. True or False? Why?
I doubt it is zero, but it is often very low. If it were zero, then the additional cost for 100 persons would be zero, which is definitely not true.
True. The marginal cost (MC) of admitting one more person to a movie theater is zero because for each additional person, there is no direct increase in cost to the operator. Once the movie is produced and the theater is open for business, there are typically fixed costs (such as rent, staff salaries, and utilities) that remain constant regardless of the number of people attending. These fixed costs are not considered when calculating the marginal cost.
In this case, the marginal cost only considers the variable costs directly associated with admitting one more person, such as the cost of a movie ticket, which can be negligible. As there are no additional variable costs incurred by the operator as people enter the theater, the marginal cost is indeed zero.