Theater Upgrades BMC is considering upgrading the sound systems in their theaters so that they can ...

Theater Upgrades BMC is considering upgrading the sound systems in their theaters so that they can patrons can get the full experience from surround sound movies. They discovered that upgrade costs at locations with 12 screens were 170,000 but were 110,000 at locations with six screens. What are the fixed costs of upgrading at a location?

QUESTION 2

For products like parking lots and hotels, the relevant costs and benefits to determine how much capacity to build are
a. LRMR and LRMC
b. LRMR and SRMC
c. SRMR and SRMC
d. SRMR and LRMC

QUESTION 3

When a firm ignores the opportunity cost of capital when making investment or shutdown decisions, this is a case of
a. Fixed-cost fallacy
b. Sunk-cost fallacy
c. Hidden-cost fallacy
d. None of the above

QUESTION 4

Firms that face capacity constraints can increase output only up to the capacity, but no further. Therefore, firms
a. Should price to capacity as long as MR > MC
b. Should price to capacity as long as MR = MC
c. Should price to capacity as long as MR < MC
d. Should not take capacity into consideration in pricing decisions

QUESTION 5

The hidden-cost fallacy occurs when
a. A firm considers irrelevant costs
b. A firm ignores relevant costs
c. A firm considers overhead or depreciation costs to make short-run decisions
d. Both a and c

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Theater Upgrades BMC is considering upgrading the sound systems in their theaters so that they can ...

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