A top-level executive of a tire manufacturer is considering diversifying and expanding operations into China, where labor and materials are cheaper. The firm has already diversified itself to double its original number of locations. All of its newest locations have been implemented by the same executive. So far, the return on investment for each of the newer locations is negative. Why might the executive want to open yet another location?

Brian has just finished college. he wants to set up a small business to make and sell fireworks. he registers his company and acquires a license from the government. he finds that most of his competitors are selling fireworks at an extremely low price. he would like to make more money, so he decides to innovate and develop better fireworks. he sells his fireworks at a higher price, and they are a huge hit with the customers. after a few years, he earns enough profit to set up a bigger fireworks factory that complies with the government’s health and safety regulations. he even starts exporting fireworks overseas. which type of economy does this scenario describe?