Which of the following results in a movement upward along the supply curve for movies in theaters? A) a decrease in the price of downloaded movies B) a decrease in movie star salaries C) a decrease in the price of movie tickets D) an increase in the number of theaters E) an increase in the price of movie tickets
An upward movement along the supply curve of movies in theatres refers to the expansion of the supply of movie tickets. This means that there would be an increase in price and quantity supplied. Given the condition of an upward movement along the supply curve, this refers to a fixed supply curve. Such an upward movement or expansion would only be possible by an increase in price, keeping all other factors constant. Hence, we can say that when all other factors are kept constant:
- An increase in price leads to supply expansion
- Decrease in price leads to supply contraction
The expansion of supply is illustrated below:
Here, the increase in price coupled with a proportionate increase in quantity leads to supply expansion from equilibrium point e to e'. This supply expansion is driven by an increase in demand where the demand curve shifts to the right from, to .
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