MANAGERIAL/ECON+BUS/STR CONNECT ACCESS
9th Edition
ISBN: 2810022149537
Author: Baye
Publisher: MCG
expand_more
expand_more
format_list_bulleted
Question
Chapter 7, Problem 9CACQ
a
To determine
Form of market structure best suited for industry A
b)
To determine
Form of market structure best suited for industry B
c)
To determine
Form of market structure best suited for industry C
d)
To determine
Form of market structure best suited for industry D
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
Based on the information given, indicate whether the following industry is best characterized by the model of perfect competition, monopoly, monopolistic competition, or oligopoly. Explain!
Industry A has a four-firm concentration ratio of 0.005 percent and a Herfindahl-Hirschman index of 75. A representative firm has a Lerner index of 0.45 and a Rothschild index of 0.34.
Industry B has a four-firm concentration ratio of 0.0001 percent and Herfindahl-Hirschman index of 55. A representative firm has a Lerner index of 0.0034 and Rothschild index of 0.00023.
Based on the information given, indicate whether the following industry is best characterized by the model of perfect competition, monopoly, monopolistic competition, or oligopoly a. Industry A has a four-firm concentration ratio of 0.005 percent and a HerfindahlHirschman index of 75. A representative firm has a Lerner index of 0.45 and a Rothschild index of 0.34. b. Industry B has a four-firm concentration ratio of 0.0001 percent and HerfindahlHirschman index of 55. A representative firm has a Lerner index of 0.0034 and Rothschild index of 0.00023 c. Industry C has a four-firm concentration ratio of 100 percent and HerfindahlHirschman index of 10,000. A representative firm has a Lerner index of 0.4 and Rothschild index of 1.0. d. Industry D has a four-firm concentration ratio of 100 percent and HerfindahlHirschman index of 5,573. A representative firm has a Lerner index equal to 0.43 and Rothschild index of 0.76.
Based on the information given, indicate whether the following industry is best characterized by the model of perfect competition, monopoly, monopolistic competition, or oligopoly.a. Industry A has a four-firm concentration ratio of 0.005 percent and a HerfindahlHirschman index of 75. A representative firm has a Lerner index of 0.45 and a Rothschild index of 0.34.b. Industry B has a four-firm concentration ratio of 0.0001 percent and HerfindahlHirschman index of 55. A representative firm has a Lerner index of 0.0034 and Rothschild index of 0.00023.c. Industry C has a four-firm concentration ratio of 100 percent and HerfindahlHirschman index of 10,000. A representative firm has a Lerner index of 0.4 and Rothschild index of 1.0.d. Industry D has a four-firm concentration ratio of 100 percent and HerfindahlHirschman index of 5,573. A representative firm has a Lerner index equal to 0.43 and Rothschild index of 0.76
Knowledge Booster
Similar questions
- A common characteristic of oligopolies is a. interdependence in pricing decisions. b. independent pricing decisions. c. low industry concentration. d. few or no plant-level economies of scale.arrow_forwardConsider a market with a duopolist structure. Each firm has similar marginal costs. Based on this information, we can conclude that: ProfitsDeceit > ProfitsCollusion > ProfitsDuopoly > ProfitsTrust in collusion ProfitsDeceit > ProfitsDuopoly > ProfitsCollusion > ProfitsTrust in collusion ProfitsDeceit > ProfitsTrust in collusion > ProfitsDuopoly > ProfitsCollusion ProfitsCollusion > ProfitsDuopoly > ProfitsDeceit > ProfitsTrust in collusionarrow_forwardIn the long-run, the amount of economic profits: for firms under monopolistic competition tend to diminish so that no more than normal profits can be earned, because entry barriers are fairly low, unless they can successfully and continuously differentiate their product or service. for (unregulated) monopoly firms always tends downward toward zero because consumers easily find close substitute goods or services. for firms under perfect competition will tend to get ever higher because free entry of new firms adds to the profits of the existing firms in the market. O for firms under perfect competition will tend to get higher over time because small-sized firms are constantly investing large sums of money in the latest production technologies and in innovations through research and development (R&D). MacBook Pro G Search or type URL 24 5 7arrow_forward
- Consider a Stackelberg duopoly with the following inverse demand function: P = 400 − 2Q1 − 2Q2. The firms' marginal costs are identical and are given by MCi = 4. Based on this information, the Stackelberg follower's reaction function is a. Q2 = 99 − 0.5Q1. b. Q2 = 198 − 0.5Q1. c. Q2 = 198 − 0.5Q2. d. Q2 = 99 − 0.5Q2.arrow_forwardConsider a duopolistic market with an inverse demand curve P(Q) = 460 − 4Qand constant marginal costs for each firm that are given by MC(Q) = 10.Assume fixed costs are negligible. The two identical firms are competing in this market by choosing their production quantities simultaneously. In the equilibrium, each firm produces 37.5 units and the prevailing market price is 160. How would the joint profits of these two firms change if they successfully formed a cartel? Change in joint profits: ? (Enter your answer rounded to two decimal places; include a negative sign if appropriate.)arrow_forwardFirms like Papa John’s, Domino’s, and Pizza Hut sell pizza and other products that aredifferentiated in nature. While numerous pizza chains exist in most locations, thedifferentiated nature of these firms’ products permits them to charge prices abovemarginal cost. Given these observations, is the pizza industry most likely a monopoly,perfectly competitive, monopolistically competitive, or an oligopoly industry? Use thecausal view of structure, conduct, and performance to explain the role of differentiationin the market for pizza. Then apply the feedback critique to the role of differentiation inthe industry.arrow_forward
- Please provide examples of firms that belong to industries that are perfectly competitive, monopolistically competitive, duopolistic, oligopolistic or just pure monopolies. Explain the industry setup by providing examples of other firms (numbers) or market concentration statistics, some description of the product (is it standard, slightly differentiated, highly differentiated, or a crucial input that one firm has control of), and the nature of barriers to entry or exit in the industry (are they non-existent or significant, and what kinds of barriers these are).arrow_forwardAssume a monopolistically competitive market, consisting of n firms, producing a homogenous product. The demand is given by P = 2 - 0.004Q; the cost function for all firms is given by C = 10 + 0.4q. Assuming that all firms will play Cournot, find the optimal number of firms at equilibrium. Show and explain your calculations!arrow_forwardThe opioid epidemic causing a staggering number of deaths each year in the United States is largely caused by two drugs: heroin and fentanyl. Much of the heroin is supplied by several major organized Mexican cartels while the much stronger fentanyl is mostly produced in hundreds of labs (big and small) in China. The market structure for heroin can be considered as an oligopoly that operates as a monopoly. On the other hand, the fentanyl industry is less organized in terms of cartel organization and therefore more competitive. How do the differences in the organization of both industries explain why deaths from fentanyl have skyrocketed in recent years? The organized heroin cartel A.does not have barriers to market entry. The more competitive fentanyl industry has substantial barriers to entry, making fentanyl a more available drug. B.has the ability to control quantity and raise the prices. The more competitive fentanyl industry makes more of the drug available at a lower…arrow_forward
- Consider the markets for tap water, bottled water, cola, and beer. Assume there is only one provider of tap water, bottled water manufacturers use advertising to differentiate their products, cola producers engage in strategic pricing behavior, and the beer market is largely controlled by only a few firms. Classify the market for each of the following drinks as either monopoly, oligopoly, monopolistic competition, or perfect competition. Monopoly Oligopoly Monopolistic Competition Perfect Competition Tap water Bottled water Cola Beerarrow_forwardCompare and contrast the following market strutures; perfect competition, monopoly, monopolistic competition, and oligopolyarrow_forwardWhich of the following are products or services of oligopolists that you own or regularly purchase? multiple choice 2 Refrigerators, bakery goods, and courier services Clothing stores, office supplies, and personal computers Automobiles, personal computers, and gasoline Ovens, refrigerators, and hair salon servicesarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you