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Explain what would happen to the price and sales in the movie theater ticket prices if...

Explain what would happen to the price and sales in the movie theater ticket prices if the following occur: (1) a decrease in the price of DVD rentals, (2) Increase in the price of concessions at the movie theater and (3) Increase in theater worker's wages. Explain what will happen to the shifts and/or movements to the demand and supply curve in each case and then determine what happens to the sales and price of movie theater prices. Each of the three cases is independent of the other.

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Answer #1

1.1.DVDs and movie tickets are substitutes.A fall in price of DVD rentals will make movie tickets relatively expensive and decrease its demand,thereby decreasing price and quantity of movie tickets.

2.The demand increases as a result of higher concessions.Price and quantity both increases.

3.Higher wages increases cost of production, reducing supply, increasing price and reducing quantity.

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