Among the four principal market structure models, monopoly and oligopoly offer the best opportunities for a firm to earn economic profits in the long run. What are some strategies for the firm which is earning economic profits to legally sustain them over time?
In the purely competitive firm, producing a homogeneous product in a market with many sellers, are there any strategies to operate and earn economic profits in the long run? Are there agricultural firms (often cited as an example of pure competition) that earn economic profits? How can they do this?
Innovation is often associated with the products the organization sells. However, innovation can be much more broadly interpreted in the organization. What other types of innovation could an organization employ to gain a competitive advantage and earn economic profits?
Here are some suggestions for these questions:
DQ #1: In monopoly and oligopoly industries, barriers to entry allow long-run economic profits. Firms that want to legally sustain their economic profits in such industries must find legal ways to keep new firms from entering the industries.
There's a large body of antitrust law on the legality of various barriers to entry, but you probably don't need to get into that. It's easier to think about some common business practices that maintain barriers to entry without elciting intervention by the authorities. My answer is going to be U.S.-centric. If you're taking this class in a different country, the answers may vary because of differences in laws.
One type of legal barrier is a patent. Patents give firms temporary legal monopolies for goods they have invented. A firm can pursue a strategy ...
Answers questions about strategies that can lead to long-run profits for monopolies and oligopolies. Discusses the lack of long-run profits in competitive industries, and ways innovation can lead to profits.
Applying concepts of managerial economics.
I need help understanding and applying concepts of managerial economics.
1. The manager of American Box Company conducts a study and notes his 10 workers produce approximately 2,000 boxes per week. He assumes that if he can employ 20 workers, the number of boxes will increase to 4,000 per week, and if he can employ 30 workers, the number of boxes per week will reach 6,000. Explain why the manager's assumption is correct or incorrect.
2. ElectraCorp has been earning zero economic profit for the past six months. Would it be wise for ElectraCorp to cease operations? Why or why not?
3. What is economic profit?
4. The best price and cost scenario occurs when the price of the company's product equals marginal cost. Explain why this is so.
5. Why wouldn't it be better for the price of a product to exceed its marginal cost?
6. Describe the four market structures of pure competition, pure monopoly, monopolistic competition, and oligopoly.
7. Under the monopolistic competition model where the vast majority of firms operate, what role is played by product differentiation?
8. Why are entrepreneurs the most important people in the successful operation of many firms?
9. Describe the Coase theorem and its approach to solving the externality problem.
10. Some people believe that the minimum wage should be raised to $10.00 per hour "to help poor people escape from poverty." How would raising the minimum wage to $10.00 per hour actually harm poor people, businesses, and consumers in general?
11. As manager of Centrix Diagnostics Services, you receive exciting news from the R & D division that a new technological breakthrough (that will very soon be discovered by all other diagnostics service companies) will cut your firm's costs of providing services by 15%. Should you recommend the current price for the services be maintained after implementing the new technology in the hopes of earning a substantial profit, or will it be wiser to lower the price for the services? Explain.
12. How do tariffs imposed by the U.S. government on foreign-made steel impact the domestic price of U.S.-made steel?
13. Who gains and who loses from a tariff?
14. How will a quota imposed by the U.S. government on foreign-made machinery impact the domestic price of the same kind of machinery made by U.S. companies?
15. Who gains and who loses from a quota?
16. "We need all kinds of trade restrictions against foreign competition to protect American jobs!" Explain why this argument is seriously flawed.View Full Posting Details