1. List and briefly discuss three different measures of market power for a firm or industry. Explain why the United States Justice Department is concerned about issues of market power and why managers must be aware of those issues.
2. In a market oriented society, consumers typically prefer a competitive market structure while businesses prefer less competition. Comment on why that difference exists.
3. Most managers in private industry resent any type of government regulation. Are there any circumstances where regulation is justified from an economics perspective? Explain
4. Product innovation can be very important such as increased computing power in a personal computer or perhaps relatively unimportant such as a new design for an automobile with no new safety or performance features. Under what conditions must a firm continuously innovate even if the changes are relatively minor? Explain.
5. Assume that you have been hired as a top manager in a firm that operates in an industry where 4 large firms dominate the market. You are contacted by a manager at another of the large firms and asked to discuss cooperating in marketing decisions. Would it be ethical to have lunch and discuss the issues? Would it be legal to discuss the issues? Explain.
6. Textbooks for college courses in economics tend to be very expensive even though the material in the books is not particularly unique. In fact almost all textbooks contain the same theories and concepts and differ only in applications, examples, and graphics. What economic concepts could explain the ability of publishers and authors to maintain high prices given those facts?
7. Recently an article was published on the cnn.money website that posed the question, "Is McDonalds Doomed?" The fast food company has about 35,000 locations worldwide and has large profits; however, other primarily hamburger companies like Wendy's and Burger King are growing faster. What factors could allow one fast food provider to grow faster than others? Explain
8. Managerial economics textbooks typically cover the issues of market structure and cover perfect competition in some detail. However, perfect competition actually does not exist in pure form as the conditions are too restrictive for any industry to meet though some like raw agricultural products come close. Is there a value in studying the structure for business managers? Why or why not?
9. Firms that operate in a market structure that approaches perfect competition typically are known as "price-takers", i.e., the individual firm can only expect to get the price dictated by supply and demand conditions and the decisions of the individual firm do not affect their price. For example, an individual wheat producer cannot do anything to change the price as wheat is not differentiated and there are thousands of producers. If you were the manager of a large farm that produced wheat, what strategies could you employ to try to assure the financial health of the firm?
10. Coca-Cola and Pepsi are the two largest bottlers of soft drinks in the world and currently have over 80% of the United States market. Suppose one of these companies wished to acquire a smaller company like Blenheim ginger ale. Would there be legal issues to overcome? explain