Zelda Industries Is the Only Firm of Its Kind in the World.Due

question 18

Essay

Zelda Industries is the only firm of its kind in the world.Due largely to historical accident,it began producing streganomas in 1985 in a vacant warehouse.Virtually anyone with a degree in college chemistry could easily replicate the firm's formula,which is not patent protected.Nonetheless,since 1985 Zelda has averaged accounting profits of 6 percent on investment.This rate is comparable to the average interest rate that large banks paid on deposits over the period.Do you think Zelda is earning monopoly profits?
Why?

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Definitions:

Lottery

A form of gambling involving the drawing of numbers at random for a prize, often regulated by governmental entities.

Probability

A measure of the likelihood that an event will occur, often represented as a number between 0 and 1, where 0 indicates impossibility and 1 indicates certainty.

Utility

A measure of satisfaction, happiness, or benefit that an individual derives from consuming goods and services.

Risk Averter

An individual or entity that prefers outcomes with less risk and is likely to avoid uncertain prospects in favor of a sure thing.