Chapter 8: # 2, 8, 9, 10

2. A major barrier to enter an industry is economies of scale. This is true due to the cost new companies encounter to not only start up but quickly be successful so that they can produce at the level of competition. This would-be monopoly, because there are at least two companies in the same market and would drive up costs.

8. US pharmaceutical companies oppose laws that would allow importation of their drugs back in the US because it would be more difficult for them to sell their drugs for different prices. Importation would mean that another company could buy them from a country who pays significantly less, resell them in the US, still making a profit, but still being lower than what the companies charge others in the US.

9. De Beers bought a large percent of the diamonds produced by other mines, combined with their 45%, they controlled over 80% of the world’s diamonds. The factors that ended its’ monopoly were the discovery and mining of new diamonds, and Russia being allowed to sell part of its diamond stock in the world market.

10. Microsoft was found guilty in violating the Sherman Act, section 2. It connected Internet Explorer to Windows at no charge, and developed Windows-related java software to make sun’s software no longer compatible. The district courts developed a remedy of dividing Microsoft into two companies that could not enter ventures together.

Chapter 9: # 3, 5, 10, 11

3. Grocery stores in an area tend to be monopolistic, because the convenience of the location.

5. Oligopolies exist because of economies of scale. Samsung, Ford, Exxon Gas Station, HP, and GMC 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.

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.

Chapter 13: # 1, 6, 7, 9

1.)The United States is about 8.5% of the world’s exports. Our most important trading partner is Canada. 19% of our exports were sold in Canada.

 6.)  Easier for the French to sell wine to the United States because it’s cheaper.

7.) Governments promote exports by subsidies and use tariffs to restrict imports. Benefits from protection policies help in the short run, but can negatively affect a manufacturer because it may rely on the policies and become outdated making the use of resources inefficient than in a Free trade market.

9.) Free trade zones are good for world trade, because it allows countries that are relatively close to each other trade to their maximum potential without any restrictions.

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