What happens if the U.S. textile industry has high barriers to entry? The textile industry’s amount of new firms eventually causes prices to drop. The textile industry’s surviving companies earn a normal level of profit over the long run. The textile industry creates blocked avenues to entry even with companies earning top profits. The textile industry’s high profits will attract new firms to enter.

What happens if the U.S. textile industry has high barriers to entry? The textile industry’s amount of new firms eventually causes prices to drop. The textile industry’s surviving companies earn a normal level of profit over the long run. The textile industry creates blocked avenues to entry even with companies earning top profits. The textile industry’s high profits will attract new firms to enter.

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter10: Strategy: The Quest To Keep Profit From Eroding

Section: Chapter Questions

Problem 3MC

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Classify the following as a government-enforced barrier to entry, a barrier to entry that is not government-enforced, or a situation that does not involve a barrier to entry. A patented invention A popular but easily copied restaurant recipe An industry where economies of scale are very small compared to the size of demand in the market A well-established reputation for slashing prices in response to new entry A well-respected brand name that has been carefully built up over many years A city passes a law on how many licenses it will issue for taxicabs A city passes a law that all taxicab drivers must pass a driving safety test and have insurance A well-known trademark Owning a spring that offers very pure water An industry where economies of scale are very large compared to the size of demand in the market
Which of the following is not an example of an entry barrier? Group of answer choices Capital needed to start business. Government licensing or franchising. Low production costs. Strong brand recognition. All of the above are barriers to entry.
Which of the following is least likely to present a barrier to entry into a market? patent laws technological advantages economies of scale products are considered identical
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?
The graph shows the relevant curves for a natural monopoly. Assume that in regulating this monopoly, policy makers have directed the firm to follow an average cost pricing rule, where there is a regulated fair-return price. What is the firm's profit? If the firm is losing money, express the loss as a negative number. Round to the nearest penny. Price ($) 36.9 31.6 25.9 22.6 18.5 16.7 15.2 11.7 10.3 Marginal revenue 11.1 16.5 29.5 Average cost Marginal cost Demand 37.5 Quantity $
The auto industry in the U.S. has long been dominated by the Big Three carmakers: Ford, General Motors, and Chrysler. The auto industry in China, on the other hand, has more than 170 carmakers. Automakers in the U.S. have some monopoly power while the car market in China has the characteristics of a perfectly competitive market. Based on these differences in market characteristics, explain how car makers in the U.S. will “behave” compared to carmakers in China. In particular, address the following considerations: How will the profits of carmakers in the U.S. compare to the profits of carmakers in China, everything else being equal?
The auto industry in the U.S. has long been dominated by the Big Three carmakers: Ford, General Motors, and Chrysler. The auto industry in China, on the other hand, has more than 170 carmakers. Automakers in the U.S. have some monopoly power while the car market in China has the characteristics of a perfectly competitive market. Based on these differences in market characteristics, explain how car makers in the U.S. will “behave” compared to carmakers in China. In particular, address the following considerations: How will the price of cars in the U.S. compare to the price of cars in China, everything else being equal?
The auto industry in the U.S. has long been dominated by the Big Three carmakers: Ford, General Motors, and Chrysler. The auto industry in China, on the other hand, has more than 170 carmakers. Automakers in the U.S. have some monopoly power while the car market in China has the characteristics of a perfectly competitive market. Based on these differences in market characteristics, explain how car makers in the U.S. will “behave” compared to carmakers in China. In particular, address the following considerations: How will carmakers in the U.S. respond to consumers’ desires compared to Chinese carmakers’ response to consumers’ desires, everything else being equal?
Answer the following: Patents awarded to pharmaceutical firms serve as barriers to entry. Why would the government create a barrier to entry for these companies? After the patent held for a name brand pharmaceutical expires, competitors can produce identical generic drugs. Even after generics are introduced, name brand pharmaceuticals often remain significantly cheaper. Explain how a firm can continue to charge more for a name brand drug.
Suppose you are the owner of a firm that is an unregulated monopoly. You find that your marginal cost curve is: MC = 40 + 3Q where MC is dollar marginal cost and Q is output. Suppose also that the demand curve for your product is P = 100 - Q where P is product price and Q is output. If you want to maximize profit, what Q should you choose? Please show work.
What are the three characteristics of a monopoly market? many buyers and seller few sellers free entry and exit barriers to entry identical products unique products one seller
The inverse demand curve a monopoly faces is p = 130 - Q. The firm's cost curve is C(Q) = 10 +5Q. What is the profit-maximizing solution? The profit-maximizing quantity is 62.5. (Round your answer to two decimal places.) The profit-maximizing price is $ 67.5. (round your answer to two decimal places.) What is the firm's economic profit? The firm earns a profit of $. (round your answer to two decimal places.)