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more specifically the costs of the operation of his theater rather than the cost of the production of the film.
With these general characteristics in mind, we may turn more specifically to consideration of the determination of the price paid by an exhibitor in practice. At the outset, one is confronted by the question as to the relationship between the cost of production of a picture and its selling price. In the motion picture business, price factors so operate that there is little relationship between cost and price. If this were to be a discussion of selling price, one might take this opportunity to discuss how far cost operates to control price in any industry. It is commonly asserted, for example, among motion picture people that cost does control price elsewhere but that it does not in their particular business. As a matter of fact, in a very substantial number of cases the relationship between cost and the selling price is somewhat indefinite at best. After all, a price paid for a woman's hat bears slight relationship to the cost of materials and labor going into that particular hat. The price depends upon its popularity when first offered to the public and the stage in the style cycle at which it is being considered. The price of a given book is not determined primarily by the cost of printing it.3 Nonreproducible goods, such as works of art, are not priced on the basis of the cost of production; neither are antiques.
In the field of physical merchandise it is the common practice, in arriving at a price at which to sell, to begin with the cost of production. Yet, after the cost of selling has been added to the cost of production, the result is very substantially modified by such factors as the customary market price, the intensity and character of competition, the general condition of business, and numerous other factors that will readily suggest themselves. It therefore becomes apparent that the relationship between cost and selling price
3 These statements concerning such items as books and women's hats hold true, even though it be recognized that there are elements of cost other than those of material and labor (and exclusive of selling costs) such as those accompanying inventory losses caused by style changes.