The lack of basic economic knowledge in this video is astounding given that it presents a larger part of the picture that could have been used to explain this better.

Steven E. Landsburg gave a great explanation of this in chapter 16 of his 1993 book, The Armchair Economist. Movie theaters are not simply selling movie tickets and concessions as separate items to earn a profit; they are selling the experience of a night at the movies.

This video correctly shows that movie theaters would be far in the red without concession sales. However, it incorrectly isolates concession revenues, compares the prices of various concessions online versus at a movie theater, and refers to the entire “markup” as profit. Even ignoring the fact that it is unlikely the online prices correctly correspond to the cost to the theater of cooking the popcorn in the manner it does or dispensing sodas via fountains and the required maintenance costs, it is not entirely profit if the movie theater would be several times more in the red than they are in the black without and with concession revenues, respectively.

Ticket sales do not have enough “markup” to produce a profit for movie theaters. A significant portion of ticket sales are licensing fees paid to the movie distribution companies. Revenue is not the same thing as profit and equating the two demonstrates a high level of economic ignorance. Ticket revenue alone is not enough to even come close to breaking even on the other costs to operate a movie theater such as the massive amount of real estate needed by a movie theater, the technology costs, the comfort costs, etc.

People are drawn to a movie theater because of the entire experience of the night at the movies. Some people only want to enjoy the movie. Others enjoy the concessions as part of the experience. The people willing to pay higher prices at the concession stand compared to online prices for similar foods are typically willing to pay higher prices for the experience as a whole. Those who are not willing to pay for concessions because of the higher prices are less likely to pay higher prices for the experience as a whole. If ticket prices are too high, you will lose the people who are marginally making the decision to attend a movie or not based on the cost of the ticket alone versus another form of entertainment. Those people may just skip the concession stand altogether. The people willing to buy a lot at the concession stand are not basing their decision to attend or not on the ticket price.

Taking a loss on ticket sales but making it up on concessions allows movie theaters to get more people to come to the theater by charging customers with diverse preferences and incomes closer to each customer’s willingness to pay despite wide differences in the elasticity of demand among the diverse groups of people who enjoy watching movies. Movie theaters make a profit based on selling the entire experience of a night at the movies. Isolating the profit or loss of individual parts of the experience is not an accurate way to examine the profit or loss of a business as a whole.

Landsburg posed an interesting hypothetical question to the often-cited captive audience explanation for high prices at movie concession stands: why do movie theaters not charge anything to use the restroom during a movie? You are a captive audience in terms of restroom options during a movie and there is even more urgency in that regard. Why don’t movie theaters charge to use their restrooms? The answer is because restrooms are not something people are generally willing to pay to use in America. Charging for restroom use will make the experience of a night at the movies very unpleasant for a lot of people. You are a “captive audience” in a lot of situations in this usage of the term but people still adapt by eating before or after such events based on their willingness to pay high food prices. If you gotta go, you gotta go, though, so the captive audience theory is debunked by the zero cost of the service that should be priced the highest under this logic.

shadowfromthestarlight replied to your post: Comedian Wanda Sykes Felt Something Wasn’t Right…

Go home, Wanda, you're drunk, a liar, or probably both. The ghost of an old slave woman was not in your room at The Jefferson Hotel in Richmond, Virginia. It was either the alcohol or you're just a liar. The Jefferson opened in 1895. It's a beautiful historic hotel but the ghost of an old slave woman was not in your room and shocked to see you in a nice hotel room because that hotel did not open until 30 years after slavery ended. You did not show this ghost how "good" things turned out by showing her whom the current president is by turning on the TV because this story never happened. You're a drunken liar who isn't even remotely funny.

Unlike Wanda Sykes’ story, the stories that alligators once lived in the marble pools in the Palm Court at The Jefferson are indeed true.  The last alligator in the marble pools lived until 1948.

Archery is awesome!  I tried it for the first time today with a group of friends!  I did so much better with a compound bow than a recurve bow.  These were four of the second group of five arrows I shot (my first group of five after switching to a compound bow).  I shot the first five with a recurve bow and the rest today with compound bows of various draw weights.  It was my first time so I’m not complaining.

TIL: The national flag of the Kingdom of France and the ensign of the French Navy were both literally a plain white flag for nearly 200 years.

How is it possible that I only just learned that the national flag of the Kingdom of France and the ensign of the French Navy were both literally a plain white flag from the early 1600s until 1789? Starting in the early 1600s during the period of the Ancien Régime until the French Revolution of 1789, the royal standard of France was a plain white flag. People joke all the time about the real French flag being the white flag since the French surrender so easily but the French literally flew a plain white flag as their national flag and as the naval ensign for the ships of line in the French Navy for nearly two hundred years. The white flag was also the standard of the commander of a French army. It was illegal during this time period under French law for a private or commercial French ship to fly a white flag because flying a white flag was exclusively reserved for the French Navy. Sometimes history is a bigger joke than anything written by a comedian.

> Chemical engineer wife applies industrial process and production background to produce the purest possible distilled spirits with software engineer husband. > They opened the first legal distillery in Loudoun County, Virginia since Prohibition. > All of their spirits are certified kosher because they seek the highest standards of purity and a Jewish friend pointed out the purity aspect and the huge potential market for kosher spirits on the East Coast to them. > They produce an award-winning white whisky named Mosby’s Spirit after Confederate Colonel John S. Mosby, commander of Mosby’s Raiders, who was known as the Gray Ghost because he was so elusive and his surprise raids were so devastating to Union forces. > Mosby’s Spirit is a KOSHER Virginia whisky that’s named after a legendary Confederate Colonel.

I don’t drink and I don’t intend to ever start drinking but I almost can’t believe this story is real because it sounds so amazing.

Catoctin Creek Distilling Company, Purcellville, Virginia

I survived Passover 5775! Where's my stupid shirt? Nevermind. I got this bianco pizza. I have enough stupid shirts.

Ten Years Ago Today, I Finally Caved To Pressure From Friends And Signed Up For Facebook

I didn’t post anything for a few more years and it took seven years before I used it regularly but it wasn’t long before regular Facebook usage became a gateway to Tumblr. Be careful with social media, kids, because it’s not that far to Reddit or Twitter. Then, it’s all a downward spiral to appearing on a crappy MTV show about the Internet ruining things only to find out it’s not actually about how the Internet ruined music videos being on the Music Television channel which would actually be a worthwhile show.