Suppose You Observe That the Price of Movie Admissions Decline

question 334

Multiple Choice

Suppose you observe that the price of movie admissions decline and that the number of people attending movies declines as well. If only the demand curve or the supply curve shifts, this suggests that

• A) movies are a normal good and incomes have increased.
• B) high salaries for Hollywood actors have increased the cost of movie making.
• C) movie theaters have experienced an increase in their operating costs due to increases in the minimum wage.
• D) admission prices for other types of entertainment, such as live shows and sporting events, have also declined.

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Definitions:

Historical Cost

The original monetary value of an asset or expense as recorded at the time of acquisition or incurrence, without adjusting for inflation or changes in value.

Fair Value

An estimate of the price at which an asset or liability could be traded in a fair transaction between willing parties, not involving forced sale or liquidation.

Weighted Average

A mathematical calculation that takes into account both the magnitude and the significance of each number in a set to find an average value weighted by importance or size.

Homogeneous Products

Goods that are considered identical by consumers, and can be substituted for one another, such as commodities.