Question #1

Does it affect a monopoly's profit if it chooses price or quantity (assuming it chooses them optimally)? Why can't a monopoly choose both price and quantity?

Question #2

In 2009, the price of the Amazon's Kindle 2 was $359, while iSuppli estimated that its marginal cost was $159. What was Amazon's Lerner Index? What elasticity of demand did it face if it was engaging in short-run maximization?

Question #3

Based on the information in the "Botox" Mini-Case, what would happen to the equilibrium price and quantity if the government had set a price ceiling of $200 per vial of Botox? What welfare effects would such a policy have?

Question #4

Under what circumstances will a drug company charge more for its drugs after its patent expires?

Question #5

A monopoly currently sells its product at a single price. What conditions must be met so that it can profitably price discriminate?

Question #6

A jean manufacturer would find it profitable to charge higher prices in Europe than in the United States if it could prevent resale between the two countries. What techniques can it use to discourage resale?

Question #7

A monopoly sells its good in the United States, where the elasticity of demand is -2, and in Japan, where the elasticity of demand is -5. Its marginal cost is $10. At what price does the monopoly sell its good in each country if resale is impossible?

Question #8

A monopoly sells two products, of which any given consumer wants to buy only one (and places no value on the other good). If the monopoly can prevent resale, can it increase its profit by bundling the goods, forcing consumers to buy both goods?