Box office receipts at movie theaters increased 40 percent last year

Question

Box office receipts at movie theaters increased 40 percent last year over the previous year. Thus, the film industry overall evidently is prospering. Yet twice as many movie theaters went bankrupt last year as in the preceding two years combined.

Which one of the following, if true, most helps to resolve the apparent discrepancy in the information above?

(A) Films cost, on average, twice as much to produce today as they did ten years ago.

(B) Ticket prices at some theaters fell last year.

(C) Those of last year's films that were successful were very profitable films that were shown by exclusive engagement at only a selection of the largest theaters.

(C) The amount of money spent on film advertising increased greatly last year over the year before, and the majority of this expense was absorbed by the producers and the distributors of films, not by the theater owners.

(E) In general, an increase in a theater's box office receipts for any year is accompanied by an increase in that theater's profits from snack-food and soft-drink sales for that year.

AdarshSambare · Answer

Main point:
Box office receipts increased, so the film industry seems successful. But many theaters still went bankrupt.
Prethinking:
Maybe only a small number of theaters made most of the money, while many others struggled.
(A) Incorrect
Higher production costs do not explain why theaters went bankrupt despite higher box office receipts.
(B) Incorrect
Some ticket prices falling does not explain the large increase in bankruptcies.
(C) Correct
If only a few large theaters showed the highly profitable movies, total receipts could rise while many smaller theaters failed.
(D) Incorrect
Higher advertising costs affect producers/distributors more than theaters, so this does not explain theater bankruptcies.
(E) Incorrect
This strengthens the idea that theaters should profit more, making the discrepancy worse.
 Answer: C

guddo · Answer

Box office receipts at movie theaters increased 40 percent last year over the previous year. Thus, the film industry overall evidently is prospering. Yet twice as many movie theaters went bankrupt last year as in the preceding two years combined. 
 
Which one of the following, if true, most helps to resolve the apparent discrepancy in the information above?

The apparent contradiction is that total box office receipts increased sharply, suggesting prosperity, but many more theaters went bankrupt.  The resolution  should show how total receipts could rise while  many individual theaters still suffered financially .

(A) Films cost, on average, twice as much to produce today as they did ten years ago.

Wrong. Higher production costs may affect film producers, but the paradox is about movie theaters going bankrupt despite higher theater receipts.

(B) Ticket prices at some theaters fell last year.

Wrong. This could explain lower receipts at some theaters, but it does not explain why overall box office receipts rose 40 percent.

(C) Those of last year's films that were successful were very profitable films that were shown by exclusive engagement at only a selection of the largest theaters.

Correct. This explains both facts. A few large theaters could have earned huge receipts from successful exclusive films, raising total box office receipts, while many smaller theaters lost business and went bankrupt.

(C) The amount of money spent on film advertising increased greatly last year over the year before, and the majority of this expense was absorbed by the producers and the distributors of films, not by the theater owners.

Wrong. If theater owners did not absorb most of the advertising cost, this does not explain why many theaters went bankrupt.

(E) In general, an increase in a theater's box office receipts for any year is accompanied by an increase in that theater's profits from snack-food and soft-drink sales for that year.

Wrong. This makes the discrepancy stronger, because it suggests theaters with higher receipts should also have higher concession profits.

Answer: (C)

yc168 · Answer

OE for reference:

Overview:  
This passage presents you with two pieces of information: the first says that, overall, box office receipts at movie theaters increased significantly last year; and the second says that the number of movie theaters that went bankrupt last year increased sharply. The first piece of information, as the passage points out, seems to indicate that the film industry overall is prospering. The second clearly points in the opposite direction. So there is an apparent discrepancy between what is indicated by the two pieces of information.
To answer the question, you need to pick out the piece of information that helps to explain why the increase in bankruptcies and the overall increase in box office receipts occurred during the same period.

The Correct Answer:

C  (C) tells us that last year's box office success was not widely distributed among movie theaters but was enjoyed only by a select group of theaters. So even though box office receipts increased 40 percent last year, most theaters were not in a position to benefit from this increase. At the same time, (C) suggests that a large number of theaters had a bad year last year because the films they showed were not successful. So it is not surprising that a lot of movie theaters went bankrupt at the same time that box office receipts  taken as a whole  went up and the film industry  overall  made high profits.

The Incorrect Answer Choices:

A  Since it is reasonable to think that at least some of the increased cost of producing a film would be passed on to movie theaters, (A) suggests that movie theaters probably have to pay more for a film now than they did 10 years ago. This might help explain why, even with high box office receipts, movie theaters now might have more difficulty making a profit than they did 10 years ago. But the change described in (A) took place over a 10-year period. It does not explain why  last year —a year in which overall box office receipts increased 40 percent  from the previous year —twice as many movie theaters went bankrupt  as in the preceding 2 years combined .

B  If many of the theaters that went bankrupt last year were theaters at which ticket prices fell, then we might have at least a partial explanation of why those theaters went bankrupt. (B), however, doesn't tell us this. Moreover, (B) leaves it completely mysterious why movie theaters on the verge of bankruptcy would have lowered their ticket prices in a year when people were spending far more money on movie tickets than they had in the previous year. So (B) does not help to resolve the apparent discrepancy.

D  Greatly increased film advertising might explain why overall box office receipts went up last year. But since, according to (D), most of the costs of that advertising were absorbed by the producers and distributors of the films and not by the theater owners, (D) makes it even more puzzling why theater bankruptcies increased so much last year.

E  (E) suggests that movie theaters would have greater profits from sales of soft drinks and snack foods in years with increased box office receipts. Thus, (E) makes last year's increase in bankruptcies even more puzzling, heightening the apparent discrepancy rather than resolving it.

Box office receipts at movie theaters increased 40 percent last year

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Box office receipts at movie theaters increased 40 percent last year

Prep Toolkit

615 to 715 in 15 Days (Ria's Strategies)

More than Quant/Verbal Abilities: Speed vs. Accuracy

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My Rewards