Ending each chapter and appendix in the text are the chapter summary, terms and
ID: 1210119 • Letter: E
Question
Ending each chapter and appendix in the text are the chapter summary, terms and concepts, and study questions. You are to review the chapter summary and the terms and concepts and then prepare answers to the following study questions.
Grocery stores in an area tend to be monopolistic, because the convenience of the location. But if a
certain product is priced too high, then consumers may either substitute it for a like item at a cheaper
cost or go to a different store to purchase at a lower cost.
5. Oligopolies exist because of economies of scale. Samsung, Infiniti, Maverick Gas Station, HP, and Ford
are some of the products are I use. Oligopoly is composed of a few businesses and they have
differentiated or homogeneous products and entry into the industry is also considered a barrier.
10. Advertising helps business get people into their stores. It helps give the consumer information on
current and new products. The excessive marketing also dwarfs the new business trying to get into the
industry.
11. Anheuser-Busch dominates the beer industry. People began to prefer lighter drier beers that were
produced by larger brewers. Technological advances made it the bottling industry which allowed more
cans of beer to be produced and distributed.
Explanation / Answer
False. Grocery stores in an area cannot be monopolistic, because the product they sell is homogenous and there is search cost, travelling cost and offers that each store has and that are different from store to store. It is costly for a consumer to switch from one store to another. And the convenience is thus lost.
True. Oligopolies exist because of economies of scale. Few firms are able to become the leaders or dominant players on the basis of economies of scale. When substantial scale economies exist over a large range of output, the production of a product tends to be concentrated in few large facilities, to take full advantage of the cost-reducing benefits of scale economies.
True. Advertising increases the demand for the product and get people into their stores. It helps providing the required information to the consumer information on current and new products, simultaneously attracting them to buy more. The excessive marketing also dwarfs the new business trying to get into the industry.
True. Anheuser-Busch dominates the beer industry. People began to prefer lighter drier beers that were produced by larger brewers. Technological advances made it the bottling industry which allowed more cans of beer to be produced and distributed.
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