screen. Instructions: Enter your responses as whole numbers. a. Make a table showing the value of marginal product for each screen from the first through the fifth. What property is illustrated by the behavior of marginal products? Negative returns to capital Increasing returns to capital Diminishing returns to capital (9) b. How many screens will be built if the real interest rate is 5.5 percent? square (4) screen(s) c. How many screens will be built if the real interest rate is 7.5 percent? square (x) screen(s) d. How many screens will be built if the real interest rate is 10 percent? square (x) screen(s) e. If the real interest rate is 5.5 percent, what is the highest construction cost per screen that would make a five-screen complex profitable? 45,000

## Step 1: Create a Table of Marginal Product Values<br />### The table is already provided in the image description. It shows the value of the marginal product for each screen from the first through the fifth as follows:<br />- 1 screen: $120,000<br />- 2 screens: $90,000<br />- 3 screens: $75,000<br />- 4 screens: $60,000<br />- 5 screens: $45,000<br /><br />## Step 2: Identify the Property Illustrated by the Behavior of Marginal Products<br />### The values of the marginal product decrease as the number of screens increases. This behavior illustrates the property of "Diminishing returns to capital."<br /><br />## Step 3: Determine the Number of Screens Built at Different Real Interest Rates<br />### To determine how many screens will be built, compare the value of the marginal product for each screen with the cost of capital, which is determined by the real interest rate.<br /><br />### a. Real interest rate = 5.5%<br />- The cost of capital per screen is $120,000 \times 0.055 = \$6,600$.<br />- Compare this with the marginal products:<br /> - 1 screen: $120,000 > 6,600$<br /> - 2 screens: $90,000 > 6,600$<br /> - 3 screens: $75,000 > 6,600$<br /> - 4 screens: $60,000 > 6,600$<br /> - 5 screens: $45,000 > 6,600$<br />- All five screens are profitable.<br /><br />### b. Real interest rate = 7.5%<br />- The cost of capital per screen is $120,000 \times 0.075 = \$9,000$.<br />- Compare this with the marginal products:<br /> - 1 screen: $120,000 > 9,000$<br /> - 2 screens: $90,000 > 9,000$<br /> - 3 screens: $75,000 > 9,000$<br /> - 4 screens: $60,000 > 9,000$<br /> - 5 screens: $45,000 > 9,000$<br />- All five screens are profitable.<br /><br />### c. Real interest rate = 10%<br />- The cost of capital per screen is $120,000 \times 0.10 = \$12,000$.<br />- Compare this with the marginal products:<br /> - 1 screen: $120,000 > 12,000$<br /> - 2 screens: $90,000 > 12,000$<br /> - 3 screens: $75,000 > 12,000$<br /> - 4 screens: $60,000 > 12,000$<br /> - 5 screens: $45,000 < 12,000$<br />- Only four screens are profitable.<br /><br />## Step 4: Determine the Highest Construction Cost Per Screen for Profitability at 5.5% Interest Rate<br />### At a 5.5% interest rate, the highest construction cost per screen that would make a five-screen complex profitable is equal to the marginal product of the fifth screen, which is $45,000.