Market Expansion as a 'Pull' Factor for Coordinated Investment
Investment by one group of firms can 'pull' other firms to invest by expanding their market and profit potential. This dynamic often amplifies an initial investment boom. For example, as many firms invest in new technology, the producers of that machinery and equipment may need to expand their own production facilities to meet the surge in demand. This secondary wave of investment magnifies the initial boom.
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Introduction to Macroeconomics Course
Ch.3 Aggregate demand and the multiplier model - The Economy 2.0 Macroeconomics @ CORE Econ
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Market Expansion as a 'Pull' Factor for Coordinated Investment
The Spinning Jenny and the Industrial Revolution Investment Boom
The US ICT Investment Boom and Bust (Mid-1990s to Early 2000s)
Strategic Decision-Making in the Face of Technological Disruption
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A major new cost-saving technology is introduced into a competitive industry. Arrange the following events into the most likely causal sequence that follows.
In a competitive market, if a single firm adopts a new technology that significantly lowers its production costs, rival firms can maintain their market position without adopting the same technology, provided their existing methods remain profitable on their own.
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In a scenario where a new, highly efficient production technology is introduced into a competitive industry, match each element to its most accurate description or consequence.
A revolutionary new technology is introduced that allows any firm in an industry to cut its production costs by 30%. In which of the following industry scenarios would this innovation create the most intense and immediate 'push' for all firms to invest in the new technology?
Analyzing Competitive Divergence in a Technology-Driven Market
Imagine a competitive industry where all firms are using similar technology and are reasonably profitable. A single firm then pioneers a new production process that cuts its costs by 40%. From the perspective of a rival firm that has not yet adopted this new process, what is the most critical market change that creates the 'push' to invest in the new technology?
Amplification of Investment Booms through the Capital Goods Sector
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The Electric Vehicle Supply Chain Boom
Imagine a scenario where a breakthrough in battery technology leads to a massive, industry-wide investment by numerous companies to build electric car manufacturing plants. Following this, a secondary wave of investment occurs as companies that produce lithium, cobalt, and specialized charging equipment begin to significantly expand their own operations. Which statement best analyzes the economic mechanism connecting the initial investment by car manufacturers to the secondary investment by their suppliers?
A major real estate developer begins construction on a series of large-scale residential communities in a previously undeveloped region. Arrange the following economic events into the logical sequence that illustrates how this initial investment can trigger a broader wave of investment.
Critique of a Focused Industrial Policy
The Investment Ripple Effect
According to the 'pull' theory of coordinated investment, when an initial wave of investment expands a market, supplier firms are then compelled to invest primarily due to contractual requirements imposed by the initial investors.
A major electronics company launches a highly successful new video game console, leading to a surge in investment across related industries. Match each economic actor to the specific role they play in this investment wave.
A new, highly efficient solar panel technology is developed, causing dozens of companies to invest heavily in building new solar farms. Shortly after, companies that manufacture specialized glass, silicon wafers, and power inverters also announce major expansions of their production facilities. Which of the following statements best analyzes the economic dynamic that connects the investment in solar farms to the subsequent investment by their suppliers?
When an initial, widespread investment boom by companies in a primary industry, such as smartphone manufacturing, creates a larger and more profitable market for their suppliers, like component makers, this expanded market opportunity incentivizes the component makers to undertake their own capacity expansions. This secondary wave of investment is a direct response to the growth in market ____ for the suppliers' products.
Analyzing Investment Drivers in the E-commerce Boom