Question
In: Economics
As a manager of a chain of movie theaters that are monopolies in their respective markets,...
As a manager of a chain of movie theaters that are monopolies in their respective markets, you have noticed much higher demand on weekends than during the week. You therefore conducted a study that has revealed two different demand curves at your movie theaters. On weekends, the inverse demand function is P = 20 - 0.001Q ; On weekdays, it is P = 15 - 0.002Q . You acquire legal rights from movie producers to show their films at a fixed cost of $25,000 per movie, plus a $2.50 “royalty” for each moviegoer entering your theaters (the average moviegoer in your market watches a movie only once). Devise a pricing strategy for the moviegoers to maximize your firm's profits.
[Hint: State what price strategy you are using and solve for optimal allocations for the manager]
Solutions
Rahul Sunny answered 1 year agoRelated Solutions
As a manager of a chain of movie theaters that are monopolies in their respective markets,...
As a manager of a chain of movie theaters that are monopolies in
their respective markets, you have noticed much higher demand on
weekends than during the week. You therefore conducted a study that
has revealed two different demand curves at your movie theaters. On
weekends, the inverse demand function is P = 20 – 0.001Q; on
weekdays, it is P = 15 – 0.002Q. You acquire legal rights from
movie producers to show their films at a cost of...
As a manager of a chain of movie theaters that are monopolies in their respective markets,...
As a manager of a chain of movie theaters that are monopolies in
their respective markets, you have noticed much higher demand on
weekends than during the week. You therefore conducted a study that
has revealed two different demand curves at your movie theaters. On
weekends, the inverse demand function is P = 20 – 0.001Q; on
weekdays, it is P = 15 – 0.002Q.
You acquire legal rights from movie producers to show their
films at a cost of...
As a manager of a chain of movie theaters that are monopolies in their respective markets,...
As a manager of a chain of movie theaters that are monopolies in
their respective markets, you have noticed much higher demand on
weekends than during the week. You therefore conducted a study that
has revealed two different demand curves at your movie
theaters.
On weekends, the inverse demand function is ? = 20 − 0.001?
;
On weekdays, it is ? = 15 − 0.002? .
You acquire legal rights from movie producers to show their
films at a...
Dixie Showtime Movie Theaters, Inc., owns and operates a chain of cinemas in several markets in...
Dixie Showtime Movie Theaters, Inc., owns and operates a chain
of cinemas in several markets in the southern U.S. The owners would
like to estimate weekly gross revenue as a function of advertising
expenditures. Data for a sample of eight markets for a recent week
follow. Market Weekly Gross Revenue ($100s) Television Advertising
($100s) Newspaper Advertising ($100s) Mobile 103.5 4.9 1.7
Shreveport 51.6 3.3 3 Jackson 75.8 4 1.5 Birmingham 127.8 4.2 4
Little Rock 134.8 3.2 4.3 Biloxi 101.4...
Dixie Showtime Movie Theaters, Inc., owns and operates a chain of cinemas in several markets in...
Dixie Showtime Movie Theaters, Inc., owns and operates a chain
of cinemas in several markets in the southern U.S. The owners would
like to estimate weekly gross revenue as a function of advertising
expenditures. Data for a sample of eight markets for a recent week
follow.
Market
Weekly Gross Revenue
($100s)
Television Advertising
($100s)
Newspaper Advertising
($100s)
Mobile
101.3
4.9
1.4
Shreveport
52.9
3.1
3.2
Jackson
75.8
4.2
1.5
Birmingham
127.2
4.5
4.3
Little Rock
137.8
3.6
4.0
Biloxi
102.4...
Dixie Showtime Movie Theaters, Inc., owns and operates a chain of cinemas in several markets in...
Dixie Showtime Movie Theaters, Inc., owns and operates a chain of
cinemas in several markets in the southern U.S. The owners would
like to estimate weekly gross revenue as a function of advertising
expenditures. Data for a sample of eight markets for a recent week
follow.
Market
Weekly Gross Revenue
($100s)
Television Advertising
($100s)
Newspaper Advertising
($100s)
Mobile
102.3
5.0
1.6
Shreveport
51.9
3.0
3.2
Jackson
75.5
4.0
1.5
Birmingham
127.2
4.4
4.0
Little Rock
137.8
3.6
4.3
Biloxi
101.4...
Dixie Showtime Movie Theaters, Inc., owns and operates a chain of cinemas in several markets in...
Dixie Showtime Movie Theaters, Inc., owns and operates a chain
of cinemas in several markets in the southern U.S. The owners would
like to estimate weekly gross revenue as a function of advertising
expenditures. Data for a sample of eight markets for a recent week
follow.
Market
Weekly Gross Revenue
($100s)
Television Advertising
($100s)
Newspaper Advertising
($100s)
Mobile
101.3
5
1.5
Shreveport
51.9
3
3
Jackson
74.8
4
1.5
Birmingham
126.2
4.3
4.3
Little Rock
137.8
3.6
4
Biloxi
101.4...
4. Consider the markets for film streaming services, TV screens, and tickets at movie theaters. a....
4. Consider the markets for film streaming services, TV screens,
and tickets at movie theaters.
a. For each pair, identify whether they are complements or
substitutes:
- Film streaming and TV screens
- Film streaming and movie tickets
- TV screens and movie ticket
b. Suppose a technological advance reduces the cost of
manufacturing TV screens. Draw a diagram to show what happens in
the market for TV screens.
c. Draw two more diagrams to show how the change in
the...
Problem 7-9 Dixie Showtime Movie Theaters, Inc., owns and operates a chain of cinemas in several...
Problem 7-9
Dixie Showtime Movie Theaters, Inc., owns and operates a chain
of cinemas in several markets in the southern U.S. The owners would
like to estimate weekly gross revenue as a function of advertising
expenditures. Data for a sample of eight markets for a recent week
follow.
Market
Weekly Gross Revenue
($100s)
Television Advertising
($100s)
Newspaper Advertising
($100s)
Mobile
101.3
4.9
1.4
Shreveport
52.9
3.1
3.2
Jackson
75.8
4.2
1.5
Birmingham
127.2
4.5
4.3
Little Rock
137.8
3.6
4...
Problem 7-9 Dixie Showtime Movie Theaters, Inc., owns and operates a chain of cinemas in several...
Problem 7-9 Dixie Showtime Movie Theaters, Inc., owns and
operates a chain of cinemas in several markets in the southern U.S.
The owners would like to estimate weekly gross revenue as a
function of advertising expenditures.
Data for a sample of eight markets for a recent week follow.
Market Weekly Gross Revenue ($100s) Television Advertising ($100s)
Newspaper Advertising ($100s) Mobile 102.5 5.1 1.6 Shreveport 52.7
3.2 3 Jackson 75.8 4 1.5 Birmingham 127.8 4.3 4 Little Rock 137.8
3.5 4.3...
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