When Gillette Co. unveiled Mach3, the world’s first triple-blade razor, it took a bold gamble…. Mach3 cartridges were to sell for around $1.60 each. Skeptics predicted the personal-care giant would soon be forced to cut that price. But the price is holding and Mach3 has become the No. 1 blade and razor. What’s the secret to pricing power? For starters, a commitment to innovation. Gillette spent nearly $1 billion on the development and initial marketing of Mach3.
Based on the passage, what type of monopoly is helping Gillette Co. maintain a high price for its Mach3 razor?
a. technological monopoly
b. natural monopoly
c. geographic monopoly
d. government monopoly
The Federal Trade Commission (FTC) reviews mergers to ensure that they do not substantially lesson competition. The agency certainly was busy in 1998. In that year, the number of announced mergers involving American companies exceeded 7,750. A survey conducted in 1999 suggests that the FTC’s workload will not dwindle in the near future. Of the companies polled in the survey, more than one third said that they intended to acquire other companies within the year.
This passage suggests a trend toward
a. decreased competition.
b. deregulation.
c. greater competition.
d. more power for the Federal Trade Commission.
On an average shopping trip, a consumer’s eye lingers on a product for only about 2.5 seconds. In order to stay competitive, companies experiment with new formulas, along with the color and size of the product’s packaging. These research and development costs can range from $100,000 for adding a new color to an existing product line to millions of dollars for the creation of a new product.
According to the passage, companies are trying to compete through
a. product differentiation.
b. economies of scale.
c. price-fixing.
d. nonprice competition.