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Homework answers / question archive / A motorcycle manufacturing company has invented a motorcycle engine called the Hydro-gine
A motorcycle manufacturing company has invented a motorcycle engine called the Hydro-gine. It's a hydro-powered engine that runs on water instead of gas. It's the first to market with this product, and there is a patent on the design. So, for now, this company is the only player in the game. However, just as with hybrid and electric engines in the car market, that it won't be long before the competition catches up. This company is excited about its revolutionary breakthrough, however, has never had a monopoly on a product. Please answer the following:
a. Choose 3 criteria below for this company to be considered a monopoly on this product.
Criteria:
1. Insurmountable barriers to entering the market
2. Only a few sellers of product
3. Only a few variations of same product
4. No close substitute for product
5. Some barriers to entering the market
6. Single seller of product
b. Match the letter below to the appropriate 3 criteria: (some letters may not have a match to the 3 criteria selected)
A. The company is the only one that will be selling a hydro-powered motorcycle engine.
B. The government has provided market subsidies for the company's product.
C. The Hydro-gine is the only engine that runs on water instead of gasoline or electricity, both of which are far more expensive than water.
D. Research and development are very time-consuming and expensive, and the company has a patent on its design.
E. The company has the ability to make a few different versions of the engine, so it can be installed in a variety of motorcycles.
a. Choose 3 criteria below for this company to be considered a monopoly on this product.
| 1. Insurmountable barriers to entering the market | No - other companies will soon catch up. |
| 2. Only a few sellers of product | No, currently only one seller. |
| 3. Only a few variations of the same product | No, there are no variations of the product yet. |
| 4. No close substitute for product | Yes, this is correct. |
| 5. Some barriers to entering the market | Yes, this is correct, because there is a patent on the design. |
| 6. Single seller of product | Yes, this is correct. |
b. Match the letter below to the appropriate 3 criteria: (some letters may not have a match to the 3 criteria selected)
| A. The company is the only one that will be selling a hydro-powered motorcycle engine. | 6. Single seller of the product. |
| B. The government has provided market subsidies for the company's product. | No match |
| C. The Hydro-engine is the only engine that runs on water instead of gasoline or electricity, both of which are far more expensive than water. | 4. No close substitute for the product |
| D. Research and development are very time-consuming and expensive, and the company has a patent on its design | 5. Some barriers to entering the market |
| E. The company has the ability to make a few different versions of the engine, so it can be installed in a variety of motorcycles. | No match. |
