Question 1

The monopolist Mr. Pop It Right is considering whether it is worthwhile producing an additional 25 units per day of his large bags of popcorn. Doing so would cost him an additional $46 in total. He is currently selling 56 bags per day at $3.90 each. In order to sell the additional 25 bags every day, however, he would have to lower his price to $3.20. What do you recommend?Round your answers to one decimal place.

Previous total revenue:

New total revenue:

His additional revenue therefore is (........), which is(.......) {greater then/less than}the additional cost of $46, so he(.........) (should produce/should not produce} the additional bags.

Question 2

The Costa Rican gimble industry consists of 14 firms whose annual sales are as shown in the table below:

Firm Sales (in millions)

A 4

B 8

C 12

D 18

E 23

F 17

Next eight firms(total) 18

a. What is the (four-) firm concentration ratio for this industry?

Four firm concentration: (..............) %

b. In what type of market does the gamble industry operate?

Market type: (..............) {Oligopoly / Monopoly / Monopolistic competition}