Gillette introduced the first twin-blade shaving razor in 1971. It proved to be a extremely popular.The product

Gillette introduced the first twin-blade shaving razor in 1971. It proved to be a extremely popular. The product

earned very large profits for Gillette for quite a few years. However, despite Gillette's introduction in the 1990's of many variations on this multiple-blade razor, there were many other versions and designs available from many companies, including Schick, Bic, and a host of private-label store-brand versions. By 2004, Gillette's profits and stock price had declined significantly and in 2005 Proctor & Gamble Co. bought them.

With only the information given above, an economist would probably explain the drop in Gillette's profits as follows:

Select one:

a. Gillette must have experienced an increase in some important cost of production, resulting in a drop in profits

b. The government has taxed away Gillette's excess profits.

c. Proctor & Gamble manipulated the market with advertising so as to be able to buy Gillette.

d. Gillette's high profits and success with the multi-blade design attracted many copy-cat products from other firms, increasing price competition.