Question

Popcorn Movie” Experience Gets Pricier
Cinemas are raising the price of popcorn. Demand for field corn, which is used for animal feed, corn syrup, and ethanol, has increased and its price has exploded. That’s caused some farmers to shift from growing popcorn to easier-to-grow field corn.
Source: USA Today, May 24, 2008
Explain and illustrate graphically the events described in the news clip in the market for
Popcorn
Movie tickets

Answer 1

The events will lead to two effects:

• the supply of popcorn has decreased since farmers have shifted to other crops -- causing the price to rise, and thus the quantity demanded of popcorn will also decrease
• this will also lead to a decrease in the quantity demanded of movie tickets
• this is because popcorn and movie tickets are complementary products

This can be shown in the diagrams below:

In the market for Popcorn, since farmers have reduced the supply of popcorn, the price rises. This reduces the quantity demanded for popcorn.

This causes an effect on the market for movie tickets, since they are complementary products. The exact impact on movie tickets depends on its elasticity of demand, and whether substitutes for popcorn are available easily.