Question

For the following pairs of goods, which producer is more likely to charge a bigger markup?

a. A movie theater selling popcorn
b. New York City street vendor selling popcorn

Answer 1

The movie theater selling popcorn is more likely to charge a bigger markup than the New York City street vendor.

Step-by-step explanation:

In this case, the movie theater selling popcorn is more likely to charge a bigger markup.

This is because the movie theater has a higher level of control over the price it charges for popcorn compared to a New York City street vendor. The movie theater can take advantage of its captive audience and the demand for popcorn in a movie-going setting to set higher prices and charge a bigger markup.

On the other hand, a New York City street vendor may face more competition and has limited control over the pricing of popcorn, making it less likely to charge a bigger markup.

Therefore, the movie theater selling popcorn is more likely to charge a bigger markup than the New York City street vendor.