11. Discuss the relative price elasticity of the following products:

a. Mayonnaise

b. A specific brand of mayonnaise

c. Chevrolet automobiles

d. Jaguar automobiles

e. Washing machines

f. Air travel (vacation)

g. Beer h. Diamond rings

12. Would you expect the cross-elasticity coefficients between each of the following pairs of products to be positive or negative? Why?

a. Personal computers and software

b. Electricity and natural gas

c. Apples and oranges

d. Bread and DVRs

13. Discuss the income elasticities of the following consumer products:

a. Margarine

b. Fine jewelry

c. Living room furniture

d. Whole lobsters

14. You have been asked to produce a forecast for your company's product, bottled water. Discuss the kind of information you would look for in order to make this forecast.

15. Explain the difference between a short-run and long-run production function. Cite one example of this difference in a business situation.

16. Define the law of diminishing returns. Why is this law considered a short-run phenomenon?

17. What are the key points in a short-run production function that delineate the three stages of production? Explain the relationship between the law of diminishing returns and the three stages of production.

18. When a company states its financial results in its annual report, it typically presents its in- come statement in the following way: Revenue 2 Cost of Goods Sold (including some depreciation) Gross Profit 2 Selling, General, and Administrative Expenses 2 Research and Development 2 Depreciation Operating Profit 1/2 Net Interest (income and expense) Net Profit before Income Taxes 2 Taxes Net Profit after Income Taxes "Cost of goods sold" includes all costs directly associated with making a product or providing a service. In retail merchandising, this cost is essentially the wholesale cost of goods sold. Discuss the differences between the cost of goods sold and the concept of relevant cost used in this chapter. Are there any situations in which selling, general, and administrative expenses, or research and development expenses might be considered as part of a firm's relevant costs? Explain.

19. How "perfectly" competitive do you think are the following markets: (1) stock market, (2) bond market, (3) foreign exchange market, (4) world sugar market, and (5) world oil market? Explain.

20. Use the model of perfect competition described in this chapter to explain, illustrate, or elaborate on the following statements.

a. "Increasing competition from new firms entering the market is good because it means one is in a good business."

b. "One important difference between an entrepreneur and a manager is that the former gets into a market before demand increases, while the latter gets into the market after the shift."

21. Explain the key difference between perfect competition and monopolistic competition.

22. Assume firms in the short run are earning above-normal profits. Explain what will happen to these profits in the long run for the following markets:

a. Pure monopoly

b. Oligopoly

c. Monopolistic competition

d. Perfect competition

23. In certain industries, firms buy their most important inputs in markets that are close to perfectly competitive and sell their output in imperfectly competitive markets. Cite as many examples as you can of these types of businesses. Explain why the profits of such firms tend to increase when there is an excess supply of the inputs they use in their production process.

24. In the short run, firms that seek to maximize their market share will tend to charge a lower price for their products than firms that seek to maximize their profit. Do you agree with this statement? Explain.

25. Define mutual interdependence.

26. Why do oligopolists often rely on a price leader to raise the market price of a product?

27. How does one determine whether a market is oligopolistic? Is it important for managers to recognize the existence of oligopolistic competitors in the markets in which their companies operate? Explain.

28. In the following list are a number of well-known companies and the products that they sell. Which of the four types of markets (perfect competition, monopoly, monopolistic competition, and oligopoly) best characterizes the markets in which they compete? Ex- plain why.?: a. McDonald'shamburgers b. ExxonMobil gasoline c. Dellpersonal computers d. Heinzketchup e. Procter & Gamble disposable diapers f. Starbucksgourmet coffee g. Domino'spizza h. Intel computer chip for the PC.

29. Briefly explain the structure-conduct-performance approach to the study of industrial economics. 30. Compare and contrast Porter's Five Forces model with the four basic types of markets first described in Chapter 8 in the section "Market Structure."