Q: Why is the pricing of a Gillette safety razor a form of
Why is the pricing of a Gillette safety razor a form of two-part tariff? Must Gillette be a monopoly producer of its blades as well as its razors? Suppose you were advising Gillette on how to determin...
See AnswerQ: In the town of Woodland, California, there are many dentists
In the town of Woodland, California, there are many dentists but only one eye doctor. Are senior citizens more likely to be offered discount prices for dental exams or for eye exams? Why?
See AnswerQ: Why did MGM bundle Gone with the Wind and Getting Gertie’s Garter
Why did MGM bundle Gone with the Wind and Getting Gertie’s Garter? What characteristic of demands is needed for bundling to increase profits?
See AnswerQ: We write the percentage markup of prices over marginal cost as (
We write the percentage markup of prices over marginal cost as (P – MC)/P. For a profit maximizing monopolist, how does this markup depend on the elasticity of demand? Why can this markup be viewed as...
See AnswerQ: How does mixed bundling differ from pure bundling? Under what conditions
How does mixed bundling differ from pure bundling? Under what conditions is mixed bundling preferable to pure bundling? Why do many restaurants practice mixed bundling (by offering a complete dinner a...
See AnswerQ: How does tying differ from bundling? Why might a firm want
How does tying differ from bundling? Why might a firm want to practice tying?
See AnswerQ: Why is it incorrect to advertise up to the point that the
Why is it incorrect to advertise up to the point that the last dollar of advertising expenditures generates another dollar of sales? What is the correct rule for the marginal advertising dollar?
See AnswerQ: How can a firm check that its advertising-to-sales
How can a firm check that its advertising-to-sales ratio is not too high or too low? What information does it need?
See AnswerQ: Suppose a firm can practice perfect, first-degree price discrimination
Suppose a firm can practice perfect, first-degree price discrimination. What is the lowest price it will charge, and what will its total output be?
See AnswerQ: How does a car salesperson practice price discrimination? How does the
How does a car salesperson practice price discrimination? How does the ability to discriminate correctly affect his or her earnings?
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