To increase a company's profit, a manager suggests that the company needs to increase the value of its product to customers.
Suppose, per the manager's advice, the company successfully increases the value of its product to its customers. At the same time, however, the cost per unit of the good increases by more than the price of the good increases.
Indicate whether profit per unit will increase, decrease, or stay the same (no change).
Hint: Think about the allocation of economic value for a product between cost, profit, and consumer surplus.
Increase
Decrease
No Change
Profit per Unit  

3. Individual Problems 10-3
True or False: As compared to tangible resources, brand value is unlikely to be a source of sustainable competitive advantage because it cannot be easily imitated.

   True
   False

4. Individual Problems 10-4
Consider the U.S. passenger airline industry through the lens of the Five Forces model. Suppose airline employees, who represent a significant portion of the cost of operating an airline, are strongly unionized.
Based on this information, supplier power is . All else equal, this implies that the airline industry is attractive to enter.

5. Individual Problems 10-5
The smartphone market has been dominated by Apple, but recently the Droid has been able to leverage Google's information services into market gains, while Blackberry, known for its secure business-oriented network, has attempted to become more attractive with a “friendlier” interface. At the same time, a number of less capable fringe firms are emerging.
Suppose an economist analyzes this industry as follows:
ECONOMIST: The market had been a near Apple monopoly. Profits of this monopoly attracted entry by Droid- and Blackberry-based phones, increasing rivalry between firms in the industry. The emergence of smaller fringe firms suggests that entry barriers have fallen substantially, so competition has or will soon become fiercer.
True or False: This analysis is consistent with the resource-based view (RBV).

   True
   False

6. Individual Problems 10-6
Ride sharing applications, such as Uber and Lyft, offer ground transportation at a lower cost than more standard forms of transportation, such as cab services and car rentals. In some areas, regulators have banned Uber and Lyft, making it illegal to offer rides using these applications.
What group would you expect to be behind the efforts to ban ride sharing applications?

   Gas station owners
   Cab drivers
   Uber drivers
   Police officers