8 What model of oligopoly behavior were the DRAM producers discussed in the Case in Point following? How might the DRAM producers have achieved their goal and still stayed within the law? Explain why a price increase for foreigners would increase Costa Rica’s total revenue and profits from operating its national park system 10 Restaurants typically charge much higher prices for dinner than for lunch, despite the fact that the cost of serving these meals is about the same Why you think this is the case? (Hint: Think about the primary consumers of these meals and their respective elasticities.) 11 What effect you think advertising to discourage cigarette smoking will have on teens? On adults? What changes might occur in the cigarette market as a result? 12 Many manufacturers of clothing and other consumer goods open stores in outlet malls where they charge much lower prices than they charge in their own stores located within cities Outlet malls are typically located a considerable distance from major metropolitan areas, and stores in them typically charge much lower prices than stores located within cities Given that both sets of stores are often owned by the same firm, explain this price discrimination based on likely differences in the price elasticity of demand between consumers in the two types of stores 13 Suppose a particular state were to ban the advertising of prices charged by firms that provide laser eye surgery What effect you think that would have on the price of this service? 14 The Case in Point on microbreweries noted that a large number of such breweries open every year Yet, the model of monopolistic competition predicts that the long run equilibrium solution in such markets is one of zero economic profits Why firms enter such industries? Attributed to Libby Rittenberg and Timothy Tregarthen Saylor URL: http://www.saylor.org/books/ Saylor.org 617