You are a financial analyst with a specialization in the motion picture industry. You have been hired to       analyze the prices…

You are a financial analyst with a specialization in the motion picture industry. You have been hired to

analyze the prices of movie theater tickets. The following two events are occurring (simultaneously) in the

United States:

(i) A new national chain opens new multi-screen movie theaters in most U.S. cities.

(ii) Movie theaters cut the price of popcorn and soft drinks in half.

a. Draw a demand-and-supply graph showing equilibrium in the market for movie tickets before the above

two events take place. Label the axes and curves. Label the initial equilibrium— before events (i) and (ii) —

as

P0 and Q0 on your graph.

b. Now show on your graph how event (i) affects the demand or supply curves for movie tickets. Briefly

explain which of the demand or supply variables caused the effect you are showing on your graph.

c. Now show on your graph how event (ii) affects the demand or supply curves for movie tickets. Briefly

explain which of the demand or supply variables caused the effect you are showing on your graph.

d. Based on your graphic analysis, what do you predict will happen to the equilibrium price of movie

tickets? The equilibrium quantity of movie tickets?