Tuesday, September 09, 2008

Popcorn at the movies

While driving to work this morning I heard on public radio the following discussion:

"McKenzie: OK, well, what the theaters are doing is walking you up your demand curve and charging you a high price for the first few ounces, then they're sort of walking you down. They know they can sell you more, but they've got to drastically lower the price on those marginal ounces.

"Jagow: Show us what you're talking about.

"McKenzie: OK, what I'm going to do is pour out the contents of a full tub of popcorn, the large. [sound of popcorn pouring out out of a tub] And then I'm going to take the medium bag and I'm going to pour it into the tub. [sound of popcorn pouring into a tub] And as you can see...

"Jagow: It overflows.

"McKenzie: It's on the floor.

"Jagow: So, why do people buy the large?

"McKenzie: Well, I think some of them think that they're getting more popcorn. But you also get the option of free refills. And there are some customers who will buy the tub and then on the way out of the theater ask for another refill ...

"Jagow: You're kidding.

"McKenzie: ... to take it home. And once you get two refills, you've got the price of the popcorn at the margin, down to less than 8 cents an ounce. But ...

"Jagow: That's a heck of a lot of popcorn.

"McKenzie: I have to warn you that if you get a tub, refill it twice and smother all three tubs with butter, you're going to be consuming the calories recommended for an adult male for three days."

[I admit, this is copied directly from their web page and violates all sorts of copyright laws, but I have at least given you a link to their page. Red text is my emphasis.]

1 comment:

Ben Zvan said...

It's interesting that the tub is smaller than the bag. I wonder if that's universally the case. I usually get the bag when I'm the only one getting popcorn but, when I'm in a group, I get the tub to share.