2. Individual Problems 10-2
To increase a company's profit, a manager suggests that the company
needs to increase the value of its product to customers.
Suppose, per the manager's advice, the company successfully
increases the value of its product to its customers. At the same
time, however, the cost per unit of the good increases by more than
the price of the good increases.
Indicate whether profit per unit will increase, decrease, or stay
the same (no change).
Hint: Think about the allocation of economic value for a product
between cost, profit, and consumer surplus.
Increase
Decrease
No Change
Profit per Unit
3. Individual Problems 10-3
True or False: As compared to tangible resources, brand value is
unlikely to be a source of sustainable competitive advantage
because it cannot be easily imitated.
True
False
4. Individual Problems 10-4
Consider the U.S. passenger airline industry through the lens of
the Five Forces model. Suppose airline employees, who represent a
significant portion of the cost of operating an airline, are
strongly unionized.
Based on this information, supplier power is . All else equal, this
implies that the airline industry is attractive to enter.
5. Individual Problems 10-5
The smartphone market has been dominated by Apple, but recently the
Droid has been able to leverage Google's information services into
market gains, while Blackberry, known for its secure
business-oriented network, has attempted to become more attractive
with a “friendlier” interface. At the same time, a number of less
capable fringe firms are emerging.
Suppose an economist analyzes this industry as follows:
ECONOMIST: The market had been a near Apple monopoly. Profits of
this monopoly attracted entry by Droid- and Blackberry-based
phones, increasing rivalry between firms in the industry. The
emergence of smaller fringe firms suggests that entry barriers have
fallen substantially, so competition has or will soon become
fiercer.
True or False: This analysis is consistent with the resource-based
view (RBV).
True
False
6. Individual Problems 10-6
Ride sharing applications, such as Uber and Lyft, offer ground
transportation at a lower cost than more standard forms of
transportation, such as cab services and car rentals. In some
areas, regulators have banned Uber and Lyft, making it illegal to
offer rides using these applications.
What group would you expect to be behind the efforts to ban ride
sharing applications?
Gas station owners
Cab drivers
Uber drivers
Police officers
Ans: decrease
Reason: as the price is increased, and the cost of production is also increased, the demand will decrease, which will decrease the total revenue of the firm.
Ans: True
ECONOMIST: The market had been a near Apple monopoly. Profits of
this monopoly attracted entry by Droid- and Blackberry-based
phones, increasing rivalry between firms in the industry. The
emergence of smaller fringe firms suggests that entry barriers have
fallen substantially, so competition has or will soon become
fiercer.
True or False: This analysis is consistent with the resource-based
view (RBV).
True
Ans:
Ride-sharing applications, such as Uber and Lyft, offer ground
transportation at a lower cost than more standard forms of
transportation, such as cab services and car rentals. In some
areas, regulators have banned Uber and Lyft, making it illegal to
offer rides using these applications.
What group would you expect to be behind the efforts to ban
ride-sharing applications?
Police officers
2. Individual Problems 10-2 To increase a company's profit, a manager suggests that the company needs...
1) 2) 3) The smartphone market has been dominated by Apple, but recently the Droid has been able to leverage Google's information services into market gains, while Blackberry, known for its secure business-oriented network, has attempted to become more attractive with a "friendlier" interface. At the same time, a number of less capable fringe firms are emerging. Suppose an economist analyzes this industry as follows: ECONOMIST: Each firm brings its own distinct capabilities to its product design, with each product...
1. Individual Problems 10-1 Use the table to indicate whether a high or low level of that category is associated with higher rivalry among competitors. Category Level of product differentiation High 0 Low 0 6. Individual Problems 10-6 Ride sharing applications, such as Uber and Lyft, offer ground transportation at a lower cost than more standard forms of transportation, such as cab services and car rentals. In some areas, regulators have banned Uber and Lyft, making it illegal to offer...
True/False (1 Point each) 1) When bond prices decrease, their yields to maturity increase. 2) The best forms of money and financial systems enjoy the benefits of trust, belief, and stability. 3) A fundamental function of a commercial bank is to take in deposits and make loans. 4) Traditional banks operate with low margins and high leverage. 5) Rates on bonds issued by a government can be negative. 6) ) The default risk premium is the same as the credit...
Chapter overview 1. Reasons for international trade Resources reasons Economic reasons Other reasons 2. Difference between international trade and domestic trade More complex context More difficult and risky Higher management skills required 3. Basic concept s relating to international trade Visible trade & invisible trade Favorable trade & unfavorable trade General trade system & special trade system Volume of international trade & quantum of international trade Commodity composition of international trade Geographical composition of international trade Degree / ratio of...