Analysis Of Salvatore 's Chapter 10

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Salvatore’s Chapter 10: Discussion Questions 2. The two most common measures of degree of centration is concentration ratios and Herfindahl index. Concentration ratio measures how much an industry is dominated by large firms as represented by 4,8, or 12 of the largest firms for that industry. Herfindahl index looks at the degree of concentration for an industry as the sum of squared values of shares for all of the firms in that given market. Herfindahl holds some advantageous when compared to concentration ratios such as information from all firms in the industry versus a select few firms, as well as its practicality cemented by its adoption into the Justice Department from the mid 1980s onward. 8. OPEC is an example of…show more content…
Throughout history OPEC has been able to successfully maintain its impact on oil prices and the overall industry. Problems 1. a. 70^2 +20^2 + 10^2=H 4900+400+ 100=H 5400=H b. 50^2=2500 5^2 = 25 25*10 = 250 2500+250 = 2750 = H c. 10^2=100 100*10 = 1000 1000 = H 5. QA = (12 – QB)/2 QB = (12-QA)/2 QA = 12- ((12-QA)/(2/2)) = (24 – (12 – QA))/(2/2) = (24 – 12 + QA)/(2/2) = 12 + QA/4 4QA = 12 + QA QA = 4 QB = (12 – 4)/2 = 8/2 = 4 Q = QA + QB = 4 + 4 = 8 Q = 12 – P 8 = 12 – P P + 8 = 12 P = 4 Froeb et al.’s Chapter 10: 10-4 The barriers for this industry are high. When looking at the five forces the first to consider is the thread of substitutes. Other modes of transportation could pose a threat but would be dependent on your perspective competitive advantage point. Rail and bus are threats for land travel and boat and ship pose a threat for marine travel. As far as bargaining power of buyers, this industry faces strong buyers powers due to the presence of existing buyers as well as advancements and innovation in technology. The barriers to enter the industry grant high bargaining power to the suppliers and some aircraft are only available by a few suppliers. The competitive rivalry is high because of the different competitive strategies that are employed for market share increases. The growth rate within the incrase is low and fixed cost within the industry are very
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