A company is planning to establish a chain of movie theaters. It estimates that each new...
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A company is planning to establish a chain of movie theaters. It estimates that each new theater will cost approximately $1 million. The theaters can hold up to 500 people and will have 4 showings each day with average ticket prices at $11. They estimate that concession sales will average $3 per patron. The variable costs in labor and material are estimated to be $9 per patron. They will be open 300 days each year. a) What must average occupancy be to break even? b) What must average occupancy be to earn $100,000? c) Now create a dynamic pricing model where demand increases (or decreases) by 30 people per show for every $1 difference in price. Use it to find the optimal price, assuming that at the base price the occupancy is 50%. Also, please graph Price v. Profit to show the optimal price. A company is planning to establish a chain of movie theaters. It estimates that each new theater will cost approximately $1 million. The theaters can hold up to 500 people and will have 4 showings each day with average ticket prices at $11. They estimate that concession sales will average $3 per patron. The variable costs in labor and material are estimated to be $9 per patron. They will be open 300 days each year. a) What must average occupancy be to break even? b) What must average occupancy be to earn $100,000? c) Now create a dynamic pricing model where demand increases (or decreases) by 30 people per show for every $1 difference in price. Use it to find the optimal price, assuming that at the base price the occupancy is 50%. Also, please graph Price v. Profit to show the optimal price.
Expert Answer:
Answer rating: 100% (QA)
A The breakeven occupancy rate is the point at which total revenues equal total costs Total revenues is equal to the number of patrons multiplied by t... View the full answer
Related Book For
Business Statistics a decision making approach
ISBN: 978-0133021844
9th edition
Authors: David F. Groebner, Patrick W. Shannon, Phillip C. Fry
Posted Date:
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