As a movie exhibitor, you can choose either paying a flat fee of $5,000 to show a movie for a
week or paying a fee of $2 per customer. Will your choice affect your fixed and variable costs?
How? (3 marks)
Yes, your choice will affect your fixed and variable costs. (1 mark)
If you choose to pay the flat fee, your fixed costs for the film will equal $5,000 for a week.
(0.5 mark) Your variable costs associated with the leasing of the film would then equal
zero. (0.5 mark)
If you choose to pay $2 per customer, then the costs associated with leasing the film would be
all variable. (1 mark)