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Briefly discuss the critics of Downee’s theory?

Hint your discussion should include the following points (3 points) ***Downoe’s theory ignores the possibility that inefficient firms might react positively and aggressively to declining market share. ***Compelled to initiate innovations, firms can reverse the efficiency difference. As a result, inefficient firms may become efficient over time and vice versa. ***If Downie were right, there would have been ever growing concentration in different industries, which however is not empirically supported. ***The implication is that if one efficient firm controls a market, then there will not be any chance for inefficient firms to catch up. ***The argument that new customers are attracted through price-reduction ignores non-price competition strategy like: advertisement, new product development and so on. ***The model has not taken into account the managerial restraint, which plays very important role in limiting the growth of the firm. ***The model undermines the role of other sources of financing: Issuing of new shares, borrowing from banks, issuing bonds and others sources of finance. ***A modest performance in profitability and managerial capacity to show prospect into the future could convince other sources of finance.

The following Quiz is helpful answering Multiple type Questions in your final exam.


One of the following is not CORRECT about Industrial economics?

Correct! Wrong!

One of the following is correct about Industrial economics

Correct! Wrong!

Industrial economics encompasses both industrial organization and industrial dynamics

Correct! Wrong!

Industrial economics is predominantly an empirical discipline having micro and macro aspects.

Correct! Wrong!

_________________ is concerned with the information content of the subject matter of Industrial economics

Correct! Wrong!

________________ deals with the information about the competitors, natural resources and factors of production, and government rules and regulations related to the concerned industry.

Correct! Wrong!

________________deals with topics such as pricing, choice of techniques, location of plant, investment planning, hiring and firing of labour, financial decisions, product diversification, and so on.

Correct! Wrong!

_________________ of industrial economics is concerned with the business policy and decision-making.

Correct! Wrong!

_______________ is an organization owned by one or jointly by a few or many individuals which is/are engaged in productive activity of any kind for the sake of profit or some other well-defined aim.

Correct! Wrong!

________________ is a group of firms producing a single homogeneous product and selling it in a common market

Correct! Wrong!

________________a group of sellers or of close substitute outputs who supply to a common group of buyers

Correct! Wrong!

Composition of the sellers, the buyers and their geographical location along with the industry

Correct! Wrong!

The influence that any particular buyer or seller can exercise over the price of a product

Correct! Wrong!

Structural attributes

Correct! Wrong!

Behaviour of the firm prevailed for various structure of the firm

Correct! Wrong!

________________ of an industry depends on basic conditions, such as technology and demand for a product.

Correct! Wrong!

_________________ depends on the structure (factors that determine the competitiveness of the market).

Correct! Wrong!

The expenses of trading with others above and beyond the price, such as the cost of writing and enforcing contracts.

Correct! Wrong!

Human and environmental factors affect the transaction costs across markets and within firms

Correct! Wrong!

Which of the fallowing is Correct?

Correct! Wrong!

Industrial Chapter one QUIZ

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