The Supply Curve - An ''Expansion'' of Supply - 16

When tickets to the movies cost $10 each, a cinema theatre owner will supply six separate theatres in his or her ''megaplex'' (see point E). These will be large cinemas and will play popular movies to large audiences. If the movie company receives $7 of each $10 ticket, the cinema owner only receives a gross profit of $3 per ticket. The cinema owner will probably only supply ''mass appeal'' ''Hollywood'' movies, because the profit per ticket is low when tickets are only $10 each.

If consumers of movies are willing to pay $12 per ticket, and the movie companies still only charge $7 for each customer, as the fee for providing the movie to the cinema, then the cinema will make higher gross profits per ticket. The cinema owner will supply nine screens in his or her ''megaplex''; see the movement from E to point E¹).