Movie Theaters Often Charge Different People Different Prices for Admission

question 148

Multiple Choice

Movie theaters often charge different people different prices for admission.Why don't theaters charge different prices for popcorn and other food items?

• A)Although the elasticity of demand for admission differs among customers, most people have the same the elasticity of demand for food items.
• B)Concession stand personnel are too busy to ensure that different people pay different prices for food items.
• C)Once people are in the theater, concession stands have monopoly power and can charge everyone the same high prices for food.
• D)It is difficult to limit the resale of food items from those who pay low prices to those who would have to pay high prices from the concession stand.

Understand the concept of producer and consumer surplus, and calculate changes in these surpluses due to market interventions.

Analyze the impacts of minimum wage policies on the labor market.

Discuss the role of elasticity in determining the effects of quotas and price supports on market outcomes.

Understand the method to calculate total welfare changes (consumer and producer surplus, plus government cost/benefit) due to policy implementations.

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Definitions:

Issued

Refers to the total number of shares that have been allocated by a company and are held by shareholders.

Market Rate

The prevailing interest rate available in the marketplace for securities or loans, which can fluctuate based on supply and demand, inflation, and other economic factors.

Carrying Value

The book value of assets and liabilities as recorded in a company's financial statements, reflecting their historical cost adjusted for any depreciation or amortization.

Effective Interest Method

A technique used for calculating the interest income of a debt investment over its expected life, adjusting for the impact of amortizing any discount or premium on the purchase price of the bond.