A Business Owner's Two Hats

A small bakery owner instructs an employee on the precise method for baking a new type of bread. Later that day, the owner finds they must offer a discount on the bread to compete with a sale at a larger grocery store nearby. Which statement best analyzes the two situations described?

The owner of a small business engages in various activities. Match each activity with the description of the power dynamic it best represents.

The Shifting Power of an Entrepreneur

Power Dynamics of an App Developer

The owner of a highly innovative tech startup has complete authority to set project deadlines and assign tasks to her software engineers. Due to the unique and popular nature of her product, her company faces very little competition, allowing her to set high prices for consumers.

Statement: In both interactions—with her employees and with her customers—the owner is exercising the same form of centralized, authoritative power.

The CEO of a major automobile company announces a new mandatory overtime policy for all factory workers to meet production targets. A few months later, to clear out last year's models, the same CEO approves a large-scale sales event, significantly reducing car prices to match discounts offered by rival companies. Which of the following statements best analyzes the power dynamics demonstrated by the CEO's two actions?

A manager at a retail store has the authority to create the weekly work schedule for all employees. During the same week, the manager must reduce the price of a popular line of jeans to match a competitor's sale. An observer concludes, 'The manager's power is contradictory; they are a commander in one instance and a follower in another.' Which statement provides the most accurate economic evaluation of this conclusion?

The Freelancer's Dilemma

The owner of a successful coffee shop chain decides to implement a new, more demanding work schedule for all baristas. A month later, a new competitor opens across the street offering similar drinks at a lower price, forcing the owner to introduce a loyalty program and reduce prices on certain items to retain customers. How does the economic context explain the difference in the owner's ability to exert power in these two situations?