Why Popcorn Costs So Much at the Movies: And Other Pricing Puzzles

Why Popcorn Costs So Much at the Movies: And Other Pricing Puzzles

Richard B. McKenzie

Language: English

Pages: 326

ISBN: 0387769994

Format: PDF / Kindle (mobi) / ePub

Why Popcorn Costs So Much at the Movies, And Other Pricing Puzzles unravels the pricing mysteries we encounter every day.

Have you ever wondered why all movies, whether blockbusters or duds, have the same ticket prices? Why sometimes there are free lunches? Why so many prices end with "9"? Why ink cartridges can cost as much as printers? Why merchants offer sales, coupons, and rebates? Why long lines are good for shoppers? Why men earn more than women, around the globe – and why they always will?

Richard McKenzie goes on to show how the 9/11 terrorists still kill Americans every day, because their attack distorted the perceived risks and relative prices of air vs. automobile travel, and jacked up both security costs and flight delays. Professor McKenzie also explores the unintended consequences of well-meaning efforts to spur the use of environmentally friendly fuels: starvation among millions of people around the world, and the destruction of rainforests in Malaysia and Indonesia.

How can these things be? If you think you know the answers, think again. Why Popcorn Costs So Much at the Movies, And Other Pricing Puzzles shows you that the real reasons are sophisticated and surprising – and in Professor McKenzie’s hands, both informative and entertaining.

You won’t need a degree in economics to enjoy this fascinating book, just an armchair and an inquiring mind.

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queues in the evening for its fixed seating capacity, represented in Figure 2 by the vertical supply curve at Si. This means that the (short-run) seating is unaffected by the price, clearly an assumption Becker makes to simplify and facilitate the development of his argument. Assuming the demand, Di, is downward sloping, as is conventionally assumed, the market-clearing price is P2. The only way a queue can emerge in this model of the market is for the price to be below P2, say, at Pi (which

1987. Physical attractiveness: Manipulation by physique and status displays. Ethology and Sociobiology 8: 143-154. Hock, Stephen J. 1985. Counterfactual reasoning and accuracy in predicting personal events. Journal of Experimental Psychology: Learning, Memory, and Cognition 11(4): 719-731- Hoch, Stephen J., Xavier Dreze, and Mary Purk. 1995. Exploring Relationship Marketing. Cleveland, Ohio: American Greetings Research Council. Hogl, S. 1988. The effects of simulated price changes on consumers

(average) prices because they induce price competition as buyers move to the lower price sellers in their markets. Coupons can be seen not only as means of competitively lowering prices, but also as one more effective form of advertising product prices, which means that more consumers are alerted to more prices across their markets that, in turn, can intensify price competition among all firms (both those that distribute coupons and those that don't). Coupons might still result in a gap in the

can become so large that they run up against organizational and communication constraints. Workers' and managers' incentives to contribute as productively as possible to firm efficiency and profits can be undercut by the fact that their individual contributions can, beyond some size firm, become hard to measure. Their lack of contribution can become obscured by the number of employees and size of the firm's output. Hence, diseconomies of scale can be expected beyond some point in firm growth,

slate of competing movies induces a very complex dynamical behavior that leads to wildly diverging outcomes."" That is to say, the success, or lack thereof, of a movie depends greatly on "marketing buzz" or on an "information cascade;' which can be the boon and bane of movie producers. Fifth, fifty to a hundred movies are in theaters at any point in time, which is to say that every movie faces substantial competition for the screens of theater owners and the eyeballs of moviegoers. Moreover, the

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