Question

The Case in Point on hockey teams suggested that sports teams may view the marginal costs of putting more fans in the stadium seats at any given game as:

Select one:

a. rising over the relevant range.

b. zero.

c. falling over the relevant range.

d. sometimes rising and sometimes falling, depending on which rival team they are playing.

Answer 1

b-zero

Marginal Cost is defined as an increase in cost when production increases by one unit. In case of a hockey match, marginal cost would mean additional costs of accomodating one more person in the stadium. Considering the stadium is large and there is unused capacity, the fixed costs of holding a game has already been incurred. Now, from viewpoint of sports teams, the additional cost of accomodating one more person would be zero as no extra expenditure is required for letting one more person attend the match.

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