The builder of a new movie theater complex is trying to decide how many screens she wants. Below are her estimates of the number of patrons the complex will attract each year, depending on the number of screens available. Number of screens 1 2 3 Total number of patrons 40,000 70,000 95,000 115,000 4 5 130,000 After paying the movie distributors and meeting all other noninterest expenses, the owner expects to net $2 per ticket sold. Construction costs are $1,000,000 per screen. Instructions: Enter your responses as whole numbers. a. Make a table showing the value of marginal product for each screen from the first through the fifth. Number of screens 1 2 3 4 5 Value of marginal product $ $ $ $ $ What property is illustrated by the behavior of marginal products? O Increasing returns to capital O Diminishing returns to capital O Negative returns to capital b. How many screens will be built if the real interest rate is 5.5 percent? screen(s) k
The builder of a new movie theater complex is trying to decide how many screens she wants. Below are her estimates of the number of patrons the complex will attract each year, depending on the number of screens available. Number of screens 1 2 3 Total number of patrons 40,000 70,000 95,000 115,000 4 5 130,000 After paying the movie distributors and meeting all other noninterest expenses, the owner expects to net $2 per ticket sold. Construction costs are $1,000,000 per screen. Instructions: Enter your responses as whole numbers. a. Make a table showing the value of marginal product for each screen from the first through the fifth. Number of screens 1 2 3 4 5 Value of marginal product $ $ $ $ $ What property is illustrated by the behavior of marginal products? O Increasing returns to capital O Diminishing returns to capital O Negative returns to capital b. How many screens will be built if the real interest rate is 5.5 percent? screen(s) k
Chapter3: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 8EB: Shonda & Shonda is a company that does land surveys and engineering consulting. They have an...
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