Why is it actually greed and price gouging?
I got some numbers, and found that a 2000 lbs tote of popcorn kernels is roughly 500 bucks. It takes 5 ounces to make a large popcorn. The movie theaters charge 12 bucks. This is $76,800. Why are we always being told its just inflation, its just how economics work?
byu/SandwichTypical3605 inAskEconomics
Posted by SandwichTypical3605
4 Comments
The price of the kernels is practically immaterial to the cost of popcorn at a movie theater. You’re paying for the employee making the popcorn, the building rent, the theater’s utilities, and all of their other costs. Inflation pushes up all of these costs.
The problem isn’t greedy theaters. Virtually every theater owner is trying to make more money and every theater attendee is trying to lower their costs. With inflation, the problem is usually that the amount of money circulating has increased relative to the amount of goods and services available for sale.
They also have to pay for the building they make it in, the employees that make it, the machine it’s made in, the packaging, the support staff that make the business run(janitors, maintenance, hr etc.). Keep in mind that movie theaters don’t actually make any money on movie tickets, and so they have to make up for it on concessions.
So yes, popcorn has a high mark up(as do sodas and other things) because that is how the movie theater business model works.
1. It’s neither greed nor price gouging (which is usually defined as a substantial price hike for an ESSENTIAL during a shock). Plus, you have assumed zero loss or wastage of product. Neat!
2. The cost of popping popcorn is not just acquiring the popcorn. Labor costs, rent, overhead, movie licensing, etc.
It’s a luxury amenity with no substitutes. People do not have to choose to buy.
Nothing is stopping you from selling popcorn at cost. But the reality is that running a movie theater has many other costs besides the kernels, and the price they charge goes into rent/employees/waste. Calling this example greed is just, wild.