Economics: Private and Public Choice
16th Edition
ISBN: 9781337642224
Author: James D. Gwartney; Richard L. Stroup; Russell S. Sobel
Publisher: Cengage Learning US
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Question
Chapter 23, Problem 12CQ
To determine
Competition and the size of the firm.
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Is it bad for consumers if a large corporation drives down prices to eliminate competition?
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Explain reasons for why some people believe having just a few firms in an industry is desirable?
Do you think firms really try to maximize profits? Do firms (especially small ones) know what prices they have to charge to maximize profits?
Chapter 23 Solutions
Economics: Private and Public Choice
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Similar questions
- Choose a product or service that you are familiar with (something you use or have used, something related to a job you or someone close to you has held, etc.). Are there a lot or few firms in the industry? Are the products similar or identical or without close substitutes? Are there barriers to entry and, if so, what are they?arrow_forwardWhy can't firms enter the market in the short-run?arrow_forwardLong-Term Competitiveness?arrow_forward
- How much market power do you think that most firms enjoy? This is an important question as you reflect on your own experience and understanding of firms that you have interacted with.arrow_forwardWhy do economists believe that economic profit is the more accurate measure of a business success? Why is economic profit the superior method of determining a business success?arrow_forwardHow does crisis affect capitalist competition? (In relation to the size of the market and impact on different firms)arrow_forward
- Why is competition an important factor that has to be studied before putting up a business?arrow_forwardProperty developers who build shopping malls like to have them “anchored” with the outlets of one or more famous national retail chains, like Target or Nordstrom. Having such “anchors” is obviously good for the mall developers because anchor stores bring a lot of foot traffic that can help generate sales for smaller stores that lack well-known national brands. But what’s in it for the national retail chains? Why become an anchor? Choose the best answer from the following list. a. The anchor stores want to make a credible threat against the developer. b. The anchor stores may feel there is a first-mover advantage to becoming one of only a few anchor stores at a new mall. c. The property developers are making empty threats to smaller stores. d. The smaller stores face a negative-sum game.arrow_forwardIdentify an industry where small and large businesses compete with each other. If you own one of the competing small businesses, what strategy would you adapt?arrow_forward
- why do economists and policy makers use perfect competition as a benchmark to analyze market structure and performance?arrow_forwardWhat evidence of economic competition do you see in your everyday life? what evidence do you see on TV? what evidence do you see on the internet?arrow_forwardExplain why so many entrepreneurs underprice their goods and services, especially when they first get into business.arrow_forward
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