Question 2

For each of the following, do you think the business is a price-taking producer?Explain your answers.

a.A cappuccino caf in a university town where there are dozens of very similar cappuccinocafs.

b.The makers of Pepsi-Cola.

c.One of many sellers of zucchini at a local farmers' market.

Question 4

Assume you own an educational company and offer several educational services. For one year, you change price for different services and record information about how many people buy your service.You thus gather information about the elasticity of demand. If you wish to raise as much as revenue as possible from your company, where will you decide to change the price: for the services that have inelastic demand or elastic or unit elastic? Explain your answer.

Question 5

Your company operates in a perfectly competitive market. You have been told that advertising can help you increase your sale in the short-run. Would you form a aggressive advertising campaign for your product?