Zara is the largest fashion retailer in Europe. Which of the following would not a barrier to entry that protects Zara's market power?
a. two weeks to develop and deliver a new item, as opposed to an industry average of nine months
b. 10,000 new designs a year
c. stores can restock in a few days
d. little advertising
e. new fashions distributed twice a week, as opposed to twice a season
D
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Refer to Table 2-11. If the two countries specialize and trade, who should export digital cameras?
A) South Korea B) China C) There is no basis for trade between the two countries. D) They should both be importing digital cameras.
There are only two firms in an industry with demand curves q1 = 30 - P and q2 = 30 - P. Both have no fixed costs and each has a marginal cost of 10 per unit produced. If they behave as profit-maximizing price takers, each produces 20 units and sells them at a price of 10 so that each firm makes zero economic profits. Suppose the two firms form a cartel. While firm 1 produces one-half of the
profit-maximizing cartel output, firm 2 cheats and produces 5 units more. What would happen to the two firms' economic profits? A) Firm 1's profits remain the same, but firm 2's profits increase by 10.5 B) Firm 1's profits decrease by 5.5, but firm 2's profits increase by 11. C) Firm 1's profits decrease by 25, but firm 2's profits increase by 12.5. D) Firm 1's profits decrease by 12.5, but firm 2's profits increase by 25.