To analyze the impact of the two events on the market for movie tickets, let's break down the effects of each event:
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Fall in the price of corn (a good used in the production of popcorn): When the price of corn falls, the cost of producing popcorn decreases. Since popcorn is a complementary good to movie tickets, lower popcorn prices could potentially increase the demand for movie tickets, as people may decide to go to the movies to enjoy popcorn.
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Rise of at-home streaming services leading theaters to decrease the number of movies offered: The reduction in the number of movies available in theaters would likely decrease the overall demand for movie tickets. If consumers have fewer options at the theater because of the decreased offering, fewer people may choose to go to the movies.
Now, considering both events together:
- The impact of the falling price of popcorn may lead to an increase in demand for movie tickets.
- Conversely, the decline in the number of movies available lowers demand.
The net effect depends on the relative strength of both influences.
Since the demand for movie tickets is likely to decrease due to fewer movie options available in theaters, we can conclude that the overall demand for movie tickets might decrease, leading to a likely decline in the equilibrium quantity of movie tickets sold.
Therefore, the most accurate response would be:
The market equilibrium quantity of movie tickets will definitely fall.
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