Logical Reasoning

PT120 · S4 · Q1 Big-budget movies often gross

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Big-budget movies often gross two or three times the cost of their production and marketing.

Given that ...

Big-budget movies often gross two or three times the cost of making and promoting them.

How is it that ...

Most of movie industry's total revenue comes from low-budget movies?

Evaluate

Maybe there just aren't that many big-budget movies. Even if each one profits $20 million, if there are only 20 of those but 2000 low-budget movies, you could still see most of the industry's total revenue come from smaller-budget films.

Maybe the profit margin on low-budget films is four or five times the cost to make and promote them.

Goal

We basically want an answer to point out something that makes big-budget movies not that lucrative for the movie industry overall, or something that makes low-budget movies good money makers.

1.

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

  1. Big-budget movies need to sell

    No Impact

    At first this is tempting, since "needing to sell tons of tickets to recoup costs" sounds like a tough way to make money. But, we already know from the background fact that big-budget movies often do sell way, way more tickets than this, since they not only recoup their production costs, they also recoup their marketing costs, and they also profit another 100-200% of those costs.

    18% picked this

  2. Correct

    There are many more low-budget

    Why this is right

    This is a new fact that helps us explain how most of the movie industry's total revenue comes from low-budget movies. Let's say that Starbucks makes a huge profit on people who buy a pound of beans and a tumbler mug. And yet, most of Starbucks' revenue comes from people who just buy a cup of coffee. Well we can resolve those two facts by pointing to the fact that for every customer who buys a pound of beans and a mug, there are 100 customers who just buy a cup of coffee. This answer is by no means bulletproof. It's still possible that even though there are many more low-budget movies, their average revenue per movie is so small that it doesn't stack up to the revenue brought in by big-budget movies. But answers on Strengthen / Weaken / Paradox don't need to be perfect. They just have to do more than any other answer to help us do the thing we're trying to do.

    Skill tested: Paradox · how this choice captures the argument's function is the move to repeat next time.

    75% picked this

  3. The movie industry’s revenues, when

    No Distinction

    This makes no distinction between big-budget and low-budget movies. This is just talking about the movie industry's revenues overall. We need an answer that gets more specific, so that we can understand why the majority slice of overall revenue is coming from low-budget movies.

    0% picked this

  4. Big-budget movies, because of their

    No Impact

    At first this is tempting, just like (A), since "costs a ton in insurance premiums" sounds like a tough way to make money. But, we already know from the background fact that big-budget movies often do bring in enough revenue that it more than offsets their high costs. Since we already know that they gross 2-3x more revenue than they cost to make, it doesn't matter how much they cost to make. In fact, since the paradoxical fact is about revenue (not profit), the higher the costs to make a big-budget movie, the more revenue a big-budget movie is bringing in (according to the first sentence). If we say that a big-budget movie cost $40 million to produce and market, then the first sentence is saying that it brings in $80-120 million of revenue. If we say, "just kidding, big-budget movies cost $50 million to produce and market", then the first sentence is saying they bring in $100-150 million of revenue. So the higher the cost of producing and marketing a big-budget movie, the more revenue we know it brings in, and thus the more confusing it would be that this giant sum of revenue is still a minority of the movie industry's total revenue.

    6% picked this

  5. The more time a company

    Unclear Impact

    We don't know whether big-budget movies take more / less / similar time to make than do low-budget movies. However, common sense would suggest to us that big-budget movies take more time, which would mean that they are more expensive to make (duh), which would mean that they bring in huge amounts of revenue (2-3 times as much as they took to make), which means we're even more confused how those huge amounts of revenue are only a minority of the movie industry's overall revenue.

    0% picked this

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