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Principles of Economics- Mankiw (5th) 505

Principles of Economics- Mankiw (5th) 505 - CHAPTER 23...

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CHAPTER 23 MEASURING THE COST OF LIVING 521 CASE STUDY MR. INDEX GOES TO HOLLYWOOD What was the most popular movie of all time? The answer might surprise you. Movie popularity is usually gauged by box office receipts. By that measure, Titanic is the No. 1 movie of all time, followed by Star Wars, Star Wars: The Phantom Menace, and ET. But this ranking ignores an obvious but important fact: Prices, including the price of movie tickets, have been rising over time. When we correct box office receipts for the effects of inflation, the story is very different. Table 23-2 shows the top ten movies of all time, ranked by inflation- adjusted box office receipts. The No. 1 movie is Gone with the Wind, which was released in 1939 and is well ahead of Titanic. In the 1930s, before everyone had televisions in their homes, about 90 million Americans went to the cinema each week, compared to about 25 million today. But the movies from that era rarely show up in popularity rankings because ticket prices were only a quarter. Scar- lett and Rhett fare a lot better once we correct for the effects of inflation.
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