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readerofbooks's profile pic

readerofbooks | College Teacher | (Level 2) Educator Emeritus

Posted on

Like you say, popcorn is more expensive in movie theaters. This also holds true for soda, candy and anything else. Also I think you answer your own question. They are able to charge pretty much whatever they want and get away with it, because of two reasons:

1. No food from the outside is allowed into the movie theater. So, there is no competition. And the consumer has no other options.

2. Closely related to point 1 is that they do have a monopoly. We are at the mercy of the theater.

So, in conclusion, when there is only one vender and people want what they have, prices will always go upward.

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pohnpei397's profile pic

pohnpei397 | College Teacher | (Level 3) Distinguished Educator

Posted on

Once again, yes, you're right.  This has to do with monopoly power and price elasticity of demand.

Price elasticity of demand is a measure of how much LESS people buy of something as its price goes UP.  When there are substitutes for a good, its elasticity is high.  That means that if its price goes up, people will buy way less of it.

Inside a movie theater, there is no substitute for popcorn.  You can't bring your own in.  So price elasticity of demand is low.  When price elasticity of demand is low, it makes sense for a seller to raise prices because they can make more money that way.

So, because the concession stand is a monopoly, demand for popcorn is relatively inelastic and the concessions people can raise the price pretty high.

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brandih's profile pic

brandih | eNotes Employee

Posted on

Most commercial theaters make their money on concessions sales only.  The ticket sales go directly to the production studio.  This is why popcorn is outrageously expensive.

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