Question

24. A consumer has to pay different price for a normal size soft drink in a cinema hall and at a fast food stall. Identify and explain the pricing method stated above.

Answer 1

Explanation:

Concessions highly subsidize ticket prices.

I have a friend that manages a movie theater. He says he manages an “air conditioned popcorn and soda parlor that plays movies in the background."

There are a couple things at play, here.

First, prices are set to what the market will bear or what competition demands. Once a customer enters the doors of a movie theater, they are in a monopoly market. There is no competition and the audience is captive. The prices will then, of course, be higher than the same products in an environment in which multiple businesses are competing for customer dollars.

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