the marginal cost to the seller of the last movie consumed would be more than the marginalbenefit to consumers.

Question

Quizplus · Accepted Answer

1. The law of diminishing marginal returns states that as one input variable is increased while all other inputs are held constant, there will be a point at which the marginal increase in output will start to decrease. In the case of movies, the more movies a seller produces, the higher the marginal cost of producing each additional movie will be. Therefore, the marginal cost to the seller of the last movie consumed would be more than the marginal benefit to consumers. 
2. The law of demand states that as the price of a good or service increases, the quantity demanded of that good or service will decrease, ceteris paribus (all other things being equal). Therefore, as the price of movies increases, consumers will demand fewer movies, which means the marginal benefit of the last movie consumed will decrease. As a result, the marginal benefit to consumers will be less than the price of the movie, which is also the marginal cost to the seller.

The Marginal Cost to the Seller of the Last Movie