The Supply Curve - An ''Expansion'' of Supply - 17

The cinema owner can vary the range of movies he or she supplies to include ''cult classics'' and others, even though these may not attract as many customers per movie screening. Because the cinema is making higher profits per ticket, not as many customers are needed per screening to make a profit. If customers are willing to pay $14 for a movie ticket, the cinema owner will expand the number of screens in his or her ''megaplex'' to twelve.

(Let's continue to assume the movie companies still only charge $7 licencing fee per ticket.) The cinema owner can offer more, smaller screens, and more varied movies (foreign language etc), because not as many customers are needed to ''breakeven'' per movie screening. The expansion in supply, caused by the market price of a cinema ticket increasing from $12 to $14, is shown in the movement E¹ to E².