Firm A producing one good acquires another firm B producing another good. The cross price elasticity of demand for the goods owned by each firm is -1.4 . Holding other things constant, the acquiring firm should
a. Raise prices on both goods
b. Lower prices on both goods
c. Raise price on the acquired good only
d. Need more information
Question 2
A pharmaceutical company faces a price regulation where it cannot charge any higher than 5,000 for a lifesaving drug. The company knows that the patients put a high value on this product and are willing to pay up to 10,000 for it. The company decides to sell the drug at 5,000 and receives another 5,000 from administration through their exclusive medical service providers. This is an example of
a. Tying
b. Bundling
c. Exclusion
d. Fraud, the company is not allowed to sell for any higher than the regulatory price
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