Answer to Question #145899 in Economics of Enterprise for Angel

Question

what would happen to the demand of movie tickets if the cost of making movies increased sharply?

Answer 1

Demand will be decreased.

When the cost of production increases in optional commodities and services, the demand is likely to drop because such product or services it produces in large quantity may not bring back the cost incurred, and besides such product or services can be substituted for something else. If a price increase in the cost of the product or services, demand will drop if it is a none essential commodity. The price determines the production rate and the product or services.