Principles of Microeconomics, California Edition
2nd Edition
ISBN: 9780393622102
Author: Dirk Mateer, Lee Coppock
Publisher: NORTON
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Chapter 6, Problem 9SP
To determine
Explain price gouging laws in movie theaters and in sports events.
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Suppose the state of Florida responds to the demands of nature lovers and bans all billboards along the roads and highways. What effect would such a ban have on the prices of motels, restaurants and other services previously advertised on billboards? Would such a ban increase the amount of time travelers take to find a place to eat or sleep?
Why does it not charge a price below the market price?
Airlines charge a lower price to people who buy their tickets two weeks in advance than they do to people who buy their tickets two days in advance. Explain why. On the other hand, Broadway theaters charge a lower price to people who buy a ticket just before the show begins that to people who buy their tickets weeks in advance. Explain the difference.
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Principles of Microeconomics, California Edition
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- Suppose an investigation reveals that the prices charged for drinks at a tourist resort are significantly higher than the prices charged for the same drinks at hotels in the nearby village. What might the explanation for this situation be?arrow_forwardSuppose High-Tech Software sells two products-a word-processing package and a spreadsheet package. Suppose that the business community values the word-processing package at $100 per unit and the spreadsheet package at $250 per unit while the university community values the word-processing package at $125 and the spreadsheet at $200. (Assume that the marginal cost of each unit is zero.) a. What are the profit-maximizing price that High-Tech should charge if they sell each product separately and what is the total price of the two goods? b. If High-Tech is able to engage in tying, what is the profit-maximizing price for the two products as a bundle? c. Should this be legal?arrow_forwardCompetition determines market price because the more that toy is in demand (which is the competition among the buyers), the higher price the consumer will pay and the more money a producer stands to make. ... Greater competition among sellers results in a lower product market price.arrow_forward
- What would be the impact of introducing a minimum allowable price on a highly desirable product?arrow_forwardSuppose there exists a costless way to charge drivers on the freeway. Under this costless system, tolls on the freeway would be adjusted according to traffic conditions. For example, when traffic is usually heavy, as it is from 6:30 a.m. to 9:00 a.m. on a weekday, the toll to drive on the freeway would be higher than when traffic is light. In other words, freeway tolls would be used to equate the demand for freeway space with its supply. Would you be in favor of such a system to replace our current (largely zero price) system? Explain your answer.arrow_forwardBusinesses often advertise that they sell "directly from the factory" and thus they "cut out the middleman." the implication of these claims is that businesses can then sell to consumers at lower prices, because they don't have to add in the costs of the middleman. Does "cutting out the middleman" actually lead to lower prices for consumers? Explain why or why not.arrow_forward
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