Economics (7th Edition) (What's New in Economics)
7th Edition
ISBN: 9780134739090
Author: Hubbard
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 14, Problem 14.1.7PA
To determine
Why would the entrepreneurs fail to create big business.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Briefly explain what it means for a firm to have cost advantage over its competitors, and what are the economic conditions conducive to it. How can cost advantage be used as a barrier to entry?
Briefly discuss the forces that have increased the level of competition faced by firms in the modern-day U.S. economy and elsewhere.
In Chapter 1, Pride, Hughes, and Kapoor (2023) describes four types of competition that exists in the capitalist system, two of which are a monopolistic competition and an oligopoly. Based on that, answer the following question:
Consider an electric utilities store and a retail store. In which of the two competitions would each fall? Explain why you placed each of the two businesses in their respective competition.
Chapter 14 Solutions
Economics (7th Edition) (What's New in Economics)
Ch. 14 - Prob. 14.1.1RQCh. 14 - Prob. 14.1.2RQCh. 14 - Prob. 14.1.3RQCh. 14 - Prob. 14.1.4PACh. 14 - Prob. 14.1.5PACh. 14 - Prob. 14.1.6PACh. 14 - Prob. 14.1.7PACh. 14 - Prob. 14.1.8PACh. 14 - Prob. 14.1.9PACh. 14 - Prob. 14.1.10PA
Ch. 14 - Prob. 14.2.1RQCh. 14 - Prob. 14.2.2RQCh. 14 - Prob. 14.2.3RQCh. 14 - Prob. 14.2.4RQCh. 14 - Prob. 14.2.5PACh. 14 - Prob. 14.2.6PACh. 14 - Prob. 14.2.7PACh. 14 - Prob. 14.2.8PACh. 14 - Prob. 14.2.9PACh. 14 - Prob. 14.2.10PACh. 14 - Prob. 14.2.11PACh. 14 - Prob. 14.2.12PACh. 14 - Prob. 14.2.13PACh. 14 - Prob. 14.2.14PACh. 14 - Prob. 14.2.15PACh. 14 - Prob. 14.2.16PACh. 14 - Prob. 14.2.17PACh. 14 - Prob. 14.2.18PACh. 14 - Prob. 14.3.1RQCh. 14 - Prob. 14.3.2RQCh. 14 - Prob. 14.3.3PACh. 14 - Prob. 14.3.4PACh. 14 - Prob. 14.3.5PACh. 14 - Prob. 14.3.6PACh. 14 - Prob. 14.4.1RQCh. 14 - Prob. 14.4.2RQCh. 14 - Prob. 14.4.3PACh. 14 - Prob. 14.4.4PACh. 14 - Prob. 14.4.5PACh. 14 - Prob. 14.4.6PACh. 14 - Prob. 14.4.7PACh. 14 - Prob. 14.4.8PACh. 14 - Prob. 14.2CTECh. 14 - Prob. 14.3CTE
Knowledge Booster
Similar questions
- Explain reasons for why some people believe having just a few firms in an industry is desirable?arrow_forward“Why do industries like electricity or cable TV have just one or two major firms while other industries like restaurants or clothes have hundreds or thousands? What might be a general difference that leads to some industries having many firms while others are dominated by just one or two?”arrow_forwardIn the following matrix for the profits of two pizza firms with the decision whether or not to offer “free delivery” what is the dominant outcome. Explain why. You deliver You don’t deliver Rival delivers Rival gets $3000 You get $3000 Rival gets $8000 You get $2000 Rival doesn’t deliver Rival gets $2000 You get $8000 Rival gets $6000 You get $6000arrow_forward
- In January 2007, XM enjoyed about 58 percent of satellite radio subscribers, and Sirius had the remaining 42 percent. Both firms were suffering losses, despite their dominance in the satellite radio market. In 2008, the DOJ decided not to challenge a merger, and these two firms united to become Sirius XM. If you were an economic consultant for Sirius, what economic arguments would you have presented to the DOJ to persuade it not to challenge the merger? Explainarrow_forwardTwo firms, A and B, are each considering trying to develop a newwidget. Whichever firm is first to develop the new widget wins a patent worth $20 million plus a penny.Developing a new widget involves several ‘steps’. The firms alternate moves, with A moving first, until oneof them wins the patent. All moves are observed. In each turn, a firm can choose whether to take 0, 1, or2 development ‘steps’. Taking 0 steps in a turn costs that firm $0. Taking 1 step in a turn costs $4 million.And taking 2 steps in a turn costs $11 million. For simplicity, assume a zero discount rate. Initially, eachfirm is 4 steps away from completing development.(a) Describe and explain carefully what will happen in this patent race and why. [Hint: it may help toread Dutta ch 12 (but notice I changed the numbers).](b) Very briefly explain what is the economic rationale for granting ‘intellectual property rights’ such aspatents. What are some disadvantages for society of granting such rights?arrow_forwardRecently, Pfizer and Allergan—the makers of Viagra and Botox, respectively—initiated a $160 billion merger. Pharmaceutical companies tend to spend a greater percentage of sales on R&D activities than other industries. The government encourages these R&D activities by granting companies patents for drugs approved by the Food and Drug Administration. For instance, Allergan spent large sums of money developing its popular wrinkle-removing neurotoxin, Botox, which is currently protected under a patent. Botox sells for about $15 per vial. Calculate the Lerner index if the marginal cost of producing Botox is $1.50 per vial. Does the Lerner index make sense in this situation?arrow_forward
- Briefly explain how firms compete/set price under - a. Perfect competition b. Oligopolyarrow_forwardA film called The 33 tells the story of 33 coal miners in Chile who were trapped inside a collapsed coal mine for more than two months. While trapped inside the mine, the miners agreed that if they ever got out alive, they would sell their story as a group, and that none of them would tell their stories individually. In essence, they formed a cartel, agreeing to sell just one big story for a lot of money rather than each miner selling his own individual story. As it turned out, they did get out alive and they did stick to their agreement. None of the miners sold his story individually. That is, the “cartel” formed by these trapped coal miners worked; nobody cheated. Explain why this cartel, unlike almost all others, was successful. This is not a research question; you don’t have to have the factually correct answer to earn full credit on this question. Rather, a full-credit answer will explain the conditions under which a cartel will be successful and then indicate the specifics of…arrow_forward7, What is a cartel and what are the principal activities the cartels are involved in (that is what tasks do the cartel managers pursue in order to be successful)? Briefly for managerial economics classarrow_forward
- Briefly explain how firms compete/set price under the Oligopoly market structure. Provide relevant examples.(500-700 words)arrow_forwardHow an increase in the market demand may reduce the importance of economies of scale as a barrier to entry?arrow_forwardHow do monopolies and oligopolies differ from perfectly competitive markets?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Exploring EconomicsEconomicsISBN:9781544336329Author:Robert L. SextonPublisher:SAGE Publications, IncEconomics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
Exploring Economics
Economics
ISBN:9781544336329
Author:Robert L. Sexton
Publisher:SAGE Publications, Inc
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning