Fig. 7 shows the seating plan used by an independent cinema during a school holiday. The cinema charges different ticket prices for the same film according ...
Question 1 Report
Fig. 7 shows the seating plan used by an independent cinema during a school holiday. The cinema charges different ticket prices for the same film according to the time of day. Table 3 gives its booking data. A nearby multiplex is considering whether to copy the policy. The independent cinema says the lower daytime price helps it fill seats that would otherwise remain empty. Some consumers believe that evening customers are being charged too much. The cinema must cover the fixed costs of rent, projection equipment and staff before it can make a profit.
| Showing | Ticket price ($) | Seats sold out of 80 |
|---|---|---|
| 14:00 | 5 | 38 |
| 20:00 | 11 | 76 |
(a) Calculate the percentage of seats sold at the 20:00 showing. [2]
(b) Define price discrimination. [2]
(c) Explain why the cinema may charge a lower price at 14:00. [3]
(d) Describe one way in which the multiplex could compete without charging an identical evening price. [3]
Answer Details
(a) \[\frac{76}{80}\times100=95\%\] Therefore 95% of seats were sold at 20:00. [2]
(b) Price discrimination is charging different prices to different consumers, or at different times, for the same product where cost differences are not the reason. [2]
(c) Daytime demand is lower, shown by more empty seats. A lower 14:00 price can attract price-sensitive consumers and earn revenue or contribution from seats that would otherwise be unused. [3]
(d) The multiplex could improve the cinema experience, for example with better seating or sound. This differentiates its service and may attract customers without matching the independent cinema's evening price. [3]
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