Part 1CCM Has Released Equipment Tailored to WomenOne of the fastest growing sports in North America is women's ice hockey. For years, women have worn ill-fitting men's gear. Now CCM has addressed the problem with a new line of women's pants and shoulder pads.Source: bardown.com, May 22, 2020How is CCM attempting to maintain economic profit?Part 2CCM is attempting to maintain economic profit by _______, which will _______. A. differentiating between men's and women's ice hockey gear; increase the demand for their clubs B. differentiating between men's and women's ice hockey gear; increase the supply of their ice hockey gear C. moving to the long-run equilibrium; eliminate markup on all hockey gear D. moving to the long-run equilibrium; move production to the efficient scale

Question

Part 1CCM Has Released Equipment Tailored to WomenOne of the fastest growing sports in North America is​ women's ice hockey. For​ years, women have worn​ ill-fitting men's gear. Now CCM has addressed the problem with a new line of​ women's pants and shoulder pads.​Source: bardown.com, May​ 22, 2020How is CCM attempting to maintain economic​ profit?Part 2CCM is attempting to maintain economic profit by​ _______, which will​ _______. A. differentiating between​ men's and​ women's ice hockey​ gear; increase the demand for their clubs B. differentiating between​ men's and​ women's ice hockey​ gear; increase the supply of their ice hockey gear C. moving to the​ long-run equilibrium; eliminate markup on all hockey gear D. moving to the​ long-run equilibrium; move production to the efficient scale

BlackTom AI · Accepted Answer

Question restatement: CCM is attempting to maintain economic profit by choosing from four options about how differentiation or production decisions affect profit. Options:
A. differentiating between men's and women's ice hockey gear; increase the demand for their clubs
B. differentiating between men's and women's ice hockey gear; increase the supply of their ice hockey gear
C. moving to the long-run equilibrium; eliminate markup on all hockey gear
D. moving to the long-run equilibrium; move production to the efficient scale

Option A analysis:
This option suggests product differentiation between men’s and women’s gear, which helps CCM tailor products to a specific segment and thus charge a premium or broaden acceptable prices. The accompanying claim that this differentiation increases demand aligns with standard marketing/economics reasoning: targeted offerings can attract more buyers within the new segment (women players) and potentially expand the overall market appeal. Differentiation can shift the demand curve to the right, supporting higher revenue and profit if costs are controlled. This is a plausible path to sustaining economic profit.

Option B analysis:
Here the focus is also on differentiation, but claims it increases supply. Differentiation itself typically affects demand more directly by expanding or shifting the demand curve. While there could be supply-side responses (e.g., producer investment in new lines), the primary effect of product differentiation is usually on consumer demand and willingness to pay, not a direct, automatic increase in supply. Therefore this option misconstrues the main profit mechanism of differentiation in this context.

Option C analysis:
This choice invokes moving to the long-run equilibrium and eliminating markup on all hockey gear. The long-run equilibrium concept involves prices reflecting normal profits where price equals average total cost, and firms earn zero economic profit in perfect competition-like frameworks. However, eliminating markup on all gear is not a straightforward or necessarily accurate depiction of moving to long-run equilibrium. In most markets, firms can earn positive profits with differentiation and branding, and eliminating markup universally would undermine incentives across the industry. Thus this option misstates typical long-run dynamics in this context.

Option D analysis:
This option claims moving to the long-run equilibrium and moving production to the efficient scale. While production at the efficient scale is a component of long-run optimization (minimizing average costs at chosen output), simply stating this as the path CCM takes to maintain economic profit omits the role of product differentiation and demand expansion evident in the scenario. It’s a more general, less targeted explanation that doesn’t directly capture how tailoring gear to women could sustain profits. Hence this option is less convincing as the specific strategy described in the scenario.

Synthesis across options:
- The scenario emphasizes the shift from ill-fitting men’s gear to a women-specific line. This is a clear case of product differentiation aimed at expanding the market and potentially increasing demand and willingness to pay. Therefore, the option that ties differentiation to increased demand is theoretically sound for sustaining economic profit.
- The other choices either misattribute the primary effect of differentiation (increase in supply) or mischaracterize long-run dynamics in a way that doesn’t align with the given context (eliminating markups or efficient-scale production without regard to market segmentation).

In sum, evaluating the logic of how differentiation affects profit and aligning with the described strategic move, option A is the most coherent and economically plausible explanation for CCM’s approach in this context.

Homework:ch14_qz1

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