Ch. 12 More realistic and Complex Pricing for commonly owned complements Flashcards
1
Q
After acquiring a complementary product,
A
reduce price on both products to increase profit.
2
Q
When MR rises above MC, output should
A
increase, or, equivalently, optimal price should fall
3
Q
A top producer of tennis balls has recently started manufacturing tennis rackets, a complementary product to tennis balls. As a result, it should
a. lower the price of its tennis balls. b. raise the price of its tennis balls. c. keep the price of its tennis balls the same.
A
a. lower the price of its tennis balls.
4
Q
A very profitable, high-margin chain of ice cream shops has acquired its main competitor, a low-margin frozen yogurt chain. It should
a. Lower the price of yogurt, and lower the price of ice cream even more. b. Raise the price of yogurt, and raise the price of ice cream even more. c. Raise the price of ice cream, and raise the price of yogurt even more. d. Lower the price of ice cream, and raise the price of yogurt.
A
c. Raise the price of ice cream, and raise the price of yogurt even more.
