Here is the article. thanks. 141 Spring 2016 Homework #4 Due April 11th, beginni
ID: 449223 • Letter: H
Question
Here is the article. thanks. 141 Spring 2016 Homework #4 Due April 11th, beginning of class Hardcopy only From the article, "Business in America" (the Economist), answer the following questions. What benefits to firms get by lobbying? 2. What does the article mean by network effects? 3. Why does the author argue for more competition? 4. What year did the largest merger movement begin? Why has the recent round of mergers been good for business but bad for consumers and the economy in general? 5. From what you have learned about a monetary production economy (M-C-M), Keynes 6. What does the article mean by return on capital? What has this looked like over the past two 7. What does this article have to do with Keynes' argument about the marginal propensity to theory of effective demand and the circular flow, what will be the outcome when "the fruits of economic growth are being hoarded"? Explain the process. decades? consume (MPC) for different income groups?
Explanation / Answer
1. Benefits of lobbying -
a. Influencing politicians to keep the rules or bend the rules as suited to their busineess
b. Producing high barriers to entry for new firms or foreign firms
c. Helps to maintain the market share for the major player.
2. Network effect refers to the effect that a user of a good or service has on other users of the same product or service. For example, Facebook collects data which is provided to them by the users. A user uses the service which in turn affects how other people use it.
3. In 2014, the top 500 firms made 45% of the entire profits of all American firms. The author believes that the firms retain the synergy which is produced after the merger of the firms to form a conglomerate which in turn, should be passed on to the consumers. With extensive lobbying, the incumbents have created high barriers to entry for the new firms. The author does not favour the fact that country's profits and data are in the hands of a few powerful firms.
4. The biggest wave of mergers began in 2008 with almost $10 trillion worth of mergers. The recent round of mergers has been good for the business because it reduces costs because of the reduced competition. However, the combined synergy created after the merger is retained the merged entity which should be passed on to the customers. This is hurting the consumers as well as the economy in general.