Lecture Extender Examples 575
Chapter 25 Monopolistic Competition
What Besides Healthier Teeth Do Toothpastes Have to Offer?
Recently, television commercials promoting toothpaste featured a well-known chef expressing
satisfaction with the latest in toothpaste flavors, including citrus, herbal, mint, and cinnamon. U.S.
Kola Real, a soft drink manufactured by a Peru-based firm called Industrias Ananos, was invented in the late
Coca–Cola trucks. Industrias Ananos differentiates Kola Real by distributing it in large bottles and advertising
Should Hair Braiders Be Licensed?
Many service industries have raised entry costs by getting legislation passed that requires extensive
training and licensing before someone can enter the industry. Physicians and lawyers are good examples.
576 Miller Economics Today, Nineteenth Edition
Advertising on the Internet Pays
The Internet is a place where firms advertise their products. Sales of advertising of all kinds dropped in
2001, but online advertising dropped dramatically. This was because there was no good evidence that
Internet advertising generated sales. In 2003, the European Interactive Advertising Association (EIAA)
examined 15 major Internet advertising campaigns in the United Kingdom, France, and Germany to find out
if Internet advertising had any major impact on consumers. A panel of consumers was used, some of whom
saw the ad campaigns only on the Internet, some on the Internet and television and other media, and some
According to a study by Tufts University, the cost of developing a new prescription drug rose from about
$231 million in 1987 to $802 million by 2001. That cost includes $403 million that a pharmaceutical
company might have earned if it had invested the funds used in an alternative line of business. According to
the study, for every 5,000 chemical compounds that are tested on animals as medications, only five are
tested on humans, and of these only one is approved for sale. Also, it typically takes 12 years on average for
a new drug to reach the market. The explanation for much of the rapidly rising cost of developing new
drugs is increases in the costs of human clinical trials, which have been increasing at 12 percent per year.
Lecture Extender Examples 577