Thursday, July 19, 2012

The Economics of the Long Line for Popcorn

Local blogger Silver Spring Singular is frustrated by long lines for popcorn at the Majestic Movie theater in our fair city.

I thought if economists could explain why popcorn is damn expensive (the J. Political Economy paper Locay and Rodriguez suggests its because theaters have cheap ticket prices to get the cheapskates in the door and high popcorn prices for the spendthrifts)

So a quick conceptual model of long lines at the movie theater concession.

Problem: It takes up to 25 minutes to pay a lot for popcorn. Doesn't it seem like that hiring one or two extra people would increase sales sufficiently to pay for their wages (in short if you sell two extra popcorns you probably pay an hours wages.) and profit.


1. The Majestic doesn't have perfect information and is underestimating the loss of popcorn sales.

2. The Majestic couldn't increase profit by hiring more workers
2.A There might be fixed costs to hiring workers so the wage is higher than we think. You need to include training and hiring costs
2.B they may need to give workers a minimal number of hours so at the margin 5 hours might need an extra staff person might not be worth training. Also it could be seasonal since movie sales are higher in the summer and the holidays.

3. Maybe waiting in line gets you to purchase more things

4. My best guess. The Majestic is not profit maximizing. Probably the manager prefers having fewer employees that are easier to manage than do the extra work of hiring and supervising more employees

Conclusion: You should really only buy popcorn at the AFI as the popcorn there is superior.

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