You are continuing to serve as a private economic consultant for Ruby Red Movie Theater in town. The theater is starting to work on its marketing plan to draw more customers into the theater. Manager
Unit VI Assignment Background Information Ruby Red Theater is now starting to work on its marketing plan to draw more customers into the theater. Manager Tracy has provided you with the following information and asked for your help: There are four movie theaters in the town (Ruby Red, Grayson’s Guild, Ryne’s Reel 2 Reel, and Garrett’s Dollar Movies). The city has passed a law banning any other movie theaters from building within the city limits. All movie theaters offer similar types of concession stand items at similar prices. The average ticket prices per movie at each theater are: Movie Theater Average Ticket Price Ruby Red Movie Theater $10.00 Grayson’s Guild Movie Theater $8.00 Ryne’s Reel 2 Reel Movie Theater $8.00 Garrett’s Dollar Movies $1.00 The first movie and last movie start times for the four theaters are: Movie Theater First Start Time Last Start Time Ruby Red Movie Theater 12:00 noon 11:00 p.m. Grayson’s Guild Movie Theater 10:00 a.m. 11:00 p.m. Ryne’s Reel 2 Reel Movie Theater 10:00 a.m. 11:00 p.m. Garrett’s Dollar Movies 12:00 noon 11:00 p.m. The average number of people who purchase tickets at each movie theater in town per month is: Movie Theater Average Monthly Movie Ticket Sales Ruby Red Movie Theater 15,000 Grayson’s Guild Movie Theater 23,000 Ryne’s Reel 2 Reel Movie Theater 25,750 Garrett’s Dollar Movies 25,200 Grayson’s Guild and Ryne’s Reel 2 Reel offer a special “Two-for-One Tuesday” where you can purchase two tickets for the price of one. Grayson’s Guild and Ryne’s Reel 2 Reel just purchased the latest Goldby Surround Sound for their movie theaters. You recall that your economics instructor at Columbia Southern University had presented you with a table that outlined the four market structure types and their characteristics. After searching through your old notes from Columbia Southern University, you found the table, which is presented below: Characteristic Perfect Competition Monopolistic Competition Oligopoly Monopoly Number of Firms Vast Many Few Dominant Firms One Type of Product Homogeneous Differentiated Differentiated Unique, Limited, No Close Substitute Size of Firm Relatively Small Relatively Small Average to Large Large Market Share Small Small Average/High Absolute Barriers to Entry and Exit None Low High Extreme Price-Setting Power None, Price Taker Low, Price Maker High, Price Maker High, Price Maker Long-Run Economic Profits None None Possible Possible Answer the questions on the next page. Your answers must be a minimum of 300 words in length for each question. Unit VI Assignment Part 1: Using the provided table that outlined the various characteristics of each market structure type and the information provided by Manager Tracy from Ruby Red Movie Theater, define the market structure (perfectly competitive, monopolistically competitive, oligopoly, or monopoly) for the movie theater market of this town. Discuss each market structure characteristic as it either relates or does not relate to the movie theater market for this town. Make sure you address all four market structures and each market structure characteristic in your discussion. If you need additional space, please feel free to insert an additional page. Answer: Part 2: Given the market structure you have identified for the movie theater industry in this town, what marketing ideas would you recommend for Ruby Red Movie Theater? If you need additional space, please feel free to insert an additional page. Answer: Part 3 Grayson’s Guild Movie Theater has made an offer to purchase Ryne’s Reel 2 Reel Movie Theater. The merger would result in both theaters operating under the same business ownership. What problems would this merger cause for Ruby Red Movie Theater? Could the government have issues with this merger? If you need additional space, please feel free to insert an additional page. Answer: