1: Why might banning advertising drive up prices? Offer two examples each of attribute-based product differentiation and information-based product differentiation

2:Are market forces strong enough to deliver efficient healthcare? Explain.

3:Your firm spent $100 million developing a new drug. It has now been approved for sale, and each pill costs $1 to manufacture. Your market research suggests that the price elasticity of demand in the general public is -1.1.

a) What price do you charge the public?

b) What would happen to profits if you charged twice as much?

c) What role does the $100 million in development costs play in your pricing decision?

d) The Medicaid agency has made a take-it-or-leave-it offer of $2 per pill. Do you accept? Explain.

4:Consumers who can buy health insurance through an employer get a tax subsidy. Use demand and supply analysis to assess how this subsidy affects consumers who cannot buy insurance through an employer.