a. What’s the rule: Monopolists charge a higher markup when demand is highly elastic or when it’s highly inelastic?
b. What’s the rule: Monopolists charge a higher markup when customers have many good substitutes or when they have few good substitutes?
c. For the following pairs of goods, which producer is more likely to charge a bigger markup? Why?
i. Someone selling new trendy shoes, or someone selling ordinary tennis shoes?
ii. A movie theater selling popcorn or a New York City street vendor selling popcorn?
iii. A pharmaceutical company selling a new powerful antibiotic or a firm selling a new powerful cure for dandruff?