You are a financial analyst with a specialization in the motion picture industry. You have been hired to analyze the prices of movie theater tickets. The following two events are occurring simultaneously) in the United States:
(i) A new national chain opens new multi-screen movie theaters in most U.S. cities.
(ii) Movie theaters cut the price of popcorn and soft drinks in half.
a. Draw a demand-and-supply graph showing equilibrium in the market for movie tickets before the above two events take place. Label the axes and curves. Label the initial equilibrium - before events (i) and (ii)- as $P _ { 0 }$ and $Q _ { 0 }$ on your graph.
b. Now show on your graph how event (i) affects the demand or supply curves for movie tickets. Briefly explain which of the demand or supply variables caused the effect you are showing on your graph.
c. Now show on your graph how event (ii) affects the demand or supply curves for movie tickets. Briefly explain which of the demand or supply variables caused the effect you are showing on your graph.
d. Based on your graphic analysis, what do you predict will happen to the equilibrium price of movie tickets? The equilibrium quantity of movie tickets?

Question

You are a financial analyst with a specialization in the motion picture industry. You have been hired to analyze the prices of movie theater tickets. The following two events are occurring  simultaneously) in the United States:
(i) A new national chain opens new multi-screen movie theaters in most U.S. cities.
(ii) Movie theaters cut the price of popcorn and soft drinks in half.
a. Draw a demand-and-supply graph showing equilibrium in the market for movie tickets before the above two events take place. Label the axes and curves. Label the initial equilibrium - before events (i) and (ii)- as $P _ { 0 }$ and  $Q _ { 0 }$ on your graph. 
b. Now show on your graph how event (i) affects the demand or supply curves for movie tickets. Briefly explain which of the demand or supply variables caused the effect you are showing on your graph.
c. Now show on your graph how event (ii) affects the demand or supply curves for movie tickets. Briefly explain which of the demand or supply variables caused the effect you are showing on your graph.
d. Based on your graphic analysis, what do you predict will happen to the equilibrium price of movie tickets? The equilibrium quantity of movie tickets?

Quizplus · Accepted Answer

The Answer of You are a financial analyst with a specialization in the motion picture industry. You have been hired to analyze the prices of movie theater tickets. The following two events are occurring  simultaneously) in the United States:
(i) A new national chain opens new multi-screen movie theaters in most U.S. cities.
(ii) Movie theaters cut the price of popcorn and soft drinks in half.
a. Draw a demand-and-supply graph showing equilibrium in the market for movie tickets before the above two events take place. Label the axes and curves. Label the initial equilibrium - before events (i) and (ii)- as $P _ { 0 }$ and  $Q _ { 0 }$ on your graph. 
b. Now show on your graph how event (i) affects the demand or supply curves for movie tickets. Briefly explain which of the demand or supply variables caused the effect you are showing on your graph.
c. Now show on your graph how event (ii) affects the demand or supply curves for movie tickets. Briefly explain which of the demand or supply variables caused the effect you are showing on your graph.
d. Based on your graphic analysis, what do you predict will happen to the equilibrium price of movie tickets? The equilibrium quantity of movie tickets?

You Are a Financial Analyst with a Specialization in the Motion