Question

select 1 of the economic concentrations (clusters) below:

I picked: Hollywood movie industry

Complete the following in your paper:

Analyze how the economic concentration in the area you chose was influenced by competition and pricing.

Analyze how the economic concentration in the area you chose influenced the supply chain

Analyze which of the 4 factors of production were the most and least important in determining the economic concentration of the area you chose.

Predict changes you anticipate for the area of economic concentration you chose. Support your predictions.

Answer 1

                        For the analysis of the given situation, the Holywood movie industry has been chosen and it is required to analyse the economic effects on the same.

The primary analysis is based on how the economic concentration in the Holywood movie industry is influenced by competition and pricing. It can be said that the Holywood movie is a million dollar industry which is highly competitive in terms of the production of films and its releasing. The competition in the market is an important factor that would affect the economic concentration in such an industry. For example, if there is an increased value for a star, then the pricing for the star increases and along with the increase there would be an increase in the people who would opt to watch the movies which would bring in more revenue to the firm. Similar is the case of pricing where the rise of star value would result in the increased pricing for the film and the related aspects which would also improve the economic concentration in the sector.

The next analysis is about the influence of this economic concentration on the supply chain. As it is understood, the economic concentration in the Holywood industry is diverted to many areas. Most of the people would be benefited by the increasing economic concentration of the industry. The wealth may be diverted to many industries that are related to the Holywood industry and would benefit many local sectors which are related to the garment manufacturing, beauty items, manufacture of items required for the shooting etc. Thus, all these would contribute to the supply chain of the industry.

The four factors of production are land, labour, capital and entrepreneurship. Considering the Holywood industry, it can be seen that it is the capital that would play an important role in the industry since all the activities would be concentrated around how the capital would be used up in the industry and all other factors are related to this usage.

Considering the industry and the concentration of wealth we can see that as time progress, there may be fall in the star value of some and rise in the star value of others. This may lead to rise and fall in the concentration of wealth in the industry and thus may prove to be disadvantageous to the sectors that are connected to the industry. Thus, in the long run, the technological progress should be made use of so that much of the benefits are not lost to the economy due to the industrial changes.