1. Why are production costs so important, please check out this article by The Economic Times, https://economictimes.indiatimes.com/markets/expert-view/right-from-1950-we-have-followed-wrong-policies-raising-production-cost-rc-bhargava/articleshow/77462250.cms. What three challenge areas does India have in car manufacturing?

2. Microsoft Case Study: http://neconomides.stern.nyu.edu/networks/homeworks/Microsoft_Case.pdf

This case study discusses briefly the economic and legal issues pertaining to the antitrust case of the United States and a number of States against Microsoft. Please answer question 4 on page 24. Do you agree with the government's theory on monopolization in section 5? Why or why not?

3. According to economics Professor William Baumol, "under oligopoly, advertising can become a life-and-death matter where a firm which fails to keep up with the advertising budget of its competitors may find its customers drifting off to rival products."

• the Business Insider https://www.businessinsider.com/soda-wars-coca-cola-pepsi-history-infographic-2011-11 "COKE VS. PEPSI: The Amazing Story Behind the Cola Wars."
• Juicebox's https://juiceboxinteractive.com/blog/how-pepsi-won-the-battle-but-lost-the-challenge/ , "The Pepsi Challenge: How Pepsi won the Battle but lost the Challenge."

Coca-Cola and Pepsi cola wars is a perfect example of what economics Professor Baumol is talking about. Pepsi used its "Pepsi challenge" as a promotional slogan for 45 years! The challenge was originally designed as a taste experiment where consumers were invited to try the two sodas out of two blank cups. Then, they were asked to choose the one that tasted the best.

Question: Do you think Pepsi was or was not the actual winner? Explain.

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