People who need life-saving drugs cannot do without them and ...

[Awilson837]

People who need life-saving drugs cannot do without them and surely will be willing to pay very high prices for them. So why can't producers of life-saving drugs charge any price that they wish?
 
  What will be an ideal response?

Question 2

Refer to Table 2-4. Assume Dina's Diner only produces sliders and hot wings. A combination of 40 sliders and 25 hot wings would appear
 
  A) along Dina's production possibilities frontier.
  B) inside Dina's production possibilities frontier.
  C) outside Dina's production possibilities frontier.
  D) at the vertical intercept of Dina's production possibilities frontier.

[manuelcastillo]

Answer to Question 1

The monopolist is powerful but cannot sell at a point beyond the market demand curve; a monopoly cannot set any price it wishes to because it faces a downward-sloping market demand curve. With an increase in price, the firm will sell a smaller number of units but will gain more revenue per unit sold. With a decrease in price, the number of units sold will increase but the revenue per unit will fall.

Answer to Question 2

B