A local movie theatre has introduced a deal on popcorn every Tuesday. The theatre has also recently switched to a cheaper fountain drink syrup. How do these cha

Question

A local movie theatre has introduced a deal on popcorn every Tuesday. The theatre has
also recently switched to a cheaper fountain drink syrup. How do these changes impact
the equilibrium price and quantity of fountain drinks on Tuesdays? Explain your answer
using a graph.

Answer 1

Hard for me to draw a graph here - but basically you're shifting your supply and demand curves. The demand curve may shift right due to increase demand because of the deal (assuming more popcorn makes people thirstier or there is a special to induce people to get a drink with the popcorn) and the supply curve also shifts down to the lower costs. So the net effect is equilibrium price is probably lower but the quantity higher.