1.Many times in economic markets, we see new firms drive old firms out of business with lower costs and better products. For instance, research shows that when Walmart arrives in a small town, many existing mom-and-pop stores go out of business within 6 to 12 months.

a.Are these "business failures" also "market failures"? Explain why or why not.

In terms of economic efficiency, is Walmart's presence good or bad? Is it possible for a smaller store to successfully compete with a national retailer such as Walmart? What features do you think these stores would have?