Please remember to explain your answers - tell me why!

6-3 Promotional Pricing

An end-of-aisle price promotion changes the price elasticity of a good from -2 to -3. If the normal price is $10, what should the promotional price be?

18-4 Asset Auctions in Sweden

In Sweden, firms that fail to meet their debt obligations are immediately auctioned off to the highest bidder. (There is no reorganization through Chapter 11 bankruptcy.) The current managers are often the high bidders for the company. Why?

18-6 Contractor Bidding

Moe Green estimates the cost of future projects for a large contracting firm. Mr. Green uses precisely the same techniques to estimate the costs of every potential job, and formulates bids by adding a standard profit markup. For some companies to whom the firm offers its services, no competitors exist, so they are almost certain to get them as clients. For these jobs, Mr. Green finds that his cost estimates are right, on average. For jobs where competitors are also vying for the business, Mr. Green finds that they almost always end up costing more than he estimates. Why does this occur?

8-6 Valentine's Day

On Valentine's Day, the price of roses increases by more than the price of greeting cards. Why? (Hint: Consider what makes roses and cards different and how that difference might affect supply's responsiveness to price.)

9-1 Faculty Housing Benefits

At a university faculty meeting in 2000, a proposal was made to increase the housing benefits for new faculty to keep pace with the high cost of housing. What will likely be the long-run effect of this proposal? (Hint: Think indifference principle.)

9-3 Entry and Elasticity

Suppose that new entry decreased your demand elasticity from -2 to -3 (made demand more elastic). By how much should you adjust your price of $10?