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 can't grasp the concept...please explain!!!!!
False. The statement that the marginal cost (MC) of admitting one more person to the theater is zero is not true for the operator of a movie theater. The marginal cost refers to the additional cost incurred when producing one more unit of output. In this case, admitting one more person to the theater would involve costs such as the cost of an additional ticket, staffing costs, utility costs, and other expenses related to accommodating the additional person.
Although it may seem like the cost of admitting one more person is negligible since the theater has fixed costs regardless of the number of people attending, there are still variable costs associated with each individual admission. These costs may not be substantial compared to the fixed costs, but they are not zero.
Additionally, even if the marginal cost for admitting an extra person were indeed zero, it wouldn't be economically beneficial for the operator to allow an unlimited number of people into the theater. There are capacity constraints, and admitting too many people could lead to overcrowding and a negative experience for the audience.
In summary, the marginal cost of admitting one more person to a movie theater is not zero; it involves various variable costs and considerations related to capacity constraints.
The statement is true. The marginal cost (MC) of admitting one more person to a movie theater is typically considered to be zero, or very close to zero.
To understand this concept, let me explain what marginal cost represents. Marginal cost refers to the additional cost incurred when producing one additional unit of a good or service. In this case, the good or service is the admission to the movie theater.
In a movie theater, the fixed costs - expenses that do not change with the number of attendees - such as the rent, utilities, and staff salaries, are already incurred regardless of the number of people attending the movie. These costs are divided over the entire capacity of the theater, regardless of how many seats are filled. Therefore, for each additional person who attends the movie, these fixed costs do not increase.
Additionally, the variable costs associated with admitting one more person to the movie theater, such as the cost of a movie ticket, are typically negligible in comparison to the fixed costs. The cost of printing an additional ticket or allowing one extra person into the theater is minimal and does not significantly affect the overall costs for the operator.
Therefore, since the marginal cost is the additional cost incurred when admitting one more person, and in this case, that additional cost is negligible or zero, it can be concluded that the marginal cost of admitting one more person to a movie theater is indeed close to zero.