Question 1

The products in a monopolistically competitive industry are:

Accepted Answer

A) homogeneous. 
B) heterogeneous. 
C) competitive. 
D) uncompetitive. 
A) homogeneous. 
B) heterogeneous. 
C) competitive. 
D) uncompetitive. B

Question 2

The tobacco industry has a Lerner index of 0.76.Based on this information, compute the optimal markup factor.

Accepted Answer

A) 4.17 times price. 
B) 4.17 times marginal cost. 
C) 0.24 times price. 
D) there is not sufficient information to determine the optimal markup factor. 
A) 4.17 times price. 
B) 4.17 times marginal cost. 
C) 0.24 times price. 
D) there is not sufficient information to determine the optimal markup factor. B

Question 3

Which of the following is not a type of integration?

Accepted Answer

A) Vertical mergers. 
B) Horizontal mergers. 
C) Mega mergers. 
D) Conglomerate merger. 
A) Vertical mergers. 
B) Horizontal mergers. 
C) Mega mergers. 
D) Conglomerate merger. C

Question 4

The causal view of the industry believes that

Accepted Answer

A) market structure is caused by firm behavior. 
B) firm behavior is caused by market structure. 
C) market performance causes firms to have a certain structure. 
D) market performance causes firms to behave in a certain way. 
A) market structure is caused by firm behavior. 
B) firm behavior is caused by market structure. 
C) market performance causes firms to have a certain structure. 
D) market performance causes firms to behave in a certain way.

Question 5

Which of the following integration types exploits economies of scope?

Accepted Answer

A) Vertical integration. 
B) Horizontal integration. 
C) Cointegration. 
D) Conglomerate integration. 
A) Vertical integration. 
B) Horizontal integration. 
C) Cointegration. 
D) Conglomerate integration.

Question 6

It is sometimes said that a manager of a monopoly can charge any price and customers will still have to buy the product.Do you agree or disagree? Why?

Accepted Answer

No.Once the monopoly has chosen the pric

Question 7

The industry elasticity of demand for gadgets is -2, while the elasticity of demand for an individual gadget manufacturer's product is -2.Based on the Rothschild approach to measuring market power, we conclude that

Accepted Answer

A) there is little monopoly power in this industry. 
B) there is significant monopoly power in this industry. 
C) the Herfindahl index for this industry is -2. 
D) the Herfindahl index for this industry is 2. 
A) there is little monopoly power in this industry. 
B) there is significant monopoly power in this industry. 
C) the Herfindahl index for this industry is -2. 
D) the Herfindahl index for this industry is 2.

Question 8

Having worked for many of the firms in the petroleum industry, you know that the price elasticity of demand for a representative firm is about -1.25.An industry publication recently reported that the Rothschild index for the petroleum industry is estimated to be 0.88.Based on this information you know that the price elasticity of demand for the firm you currently work for in the petroleum industry is

Accepted Answer

A) -1.42. 
B) -1.10. 
C) 0.704. 
D) 1.10. 
A) -1.42. 
B) -1.10. 
C) 0.704. 
D) 1.10.

Question 9

Suppose that the demand in a particular industry is given by Qd = 500 - 2P.When the market price in the industry is $50 per unit, total demand in the industry is _________.Furthermore, assume that the entire market consists of four firms that share the market equally.The HHI under these conditions is then

Accepted Answer

A) 225 units and 1,600. 
B) 400 units and 2,500. 
C) 225 units and 3,333.33. 
D) 400 units and 10,000. 
A) 225 units and 1,600. 
B) 400 units and 2,500. 
C) 225 units and 3,333.33. 
D) 400 units and 10,000.

Question 10

Suppose that the demand in a particular industry is given by Qd = 100 - 2P.When the market price in the industry is $10 per unit, total demand in the industry is ____.Furthermore, assume that each of the four largest firms in the industry sell 15 units.Based on this information, the 4-firm concentration ratio is

Accepted Answer

A) demand is 80 units and the 4-firm concentration ratio is 1.00. 
B) demand is 45 units and the 4-firm concentration ratio is 0.75. 
C) demand is 80 units and the 4-firm concentration ratio is 0.75. 
D) demand is 45 units and the 4-firm concentration ratio is 0.25. 
A) demand is 80 units and the 4-firm concentration ratio is 1.00. 
B) demand is 45 units and the 4-firm concentration ratio is 0.75. 
C) demand is 80 units and the 4-firm concentration ratio is 0.75. 
D) demand is 45 units and the 4-firm concentration ratio is 0.25.

Question 11

An industry is comprised of 25 firms, each with an equal market share.What is the 4-firm concentration ratio of this industry?

Accepted Answer

A) 0.12. 
B) 0.16. 
C) 0.20. 
D) 0.25. 
A) 0.12. 
B) 0.16. 
C) 0.20. 
D) 0.25.

Question 12

A student in a managerial economics class calculated the four-firm concentration ratio and HHI for industries A andB.What is the proper conclusion she can draw from the following findings?

Accepted Answer

A) Industry B is a monopoly. 
B) The market power of firms in industry A is greater than that in industry B. 
C) C4 is higher for Industry A while the HHI is higher for Industry B.This inconsistency must be due to a calculation error. 
D) Neither industry is perfectly competitive. 
A) Industry B is a monopoly. 
B) The market power of firms in industry A is greater than that in industry B. 
C) C4 is higher for Industry A while the HHI is higher for Industry B.This inconsistency must be due to a calculation error. 
D) Neither industry is perfectly competitive.

Question 13

Four firms control the market for a particular good resulting in an HHI of 2,900.Total industry sales are $500 and it is known that two firms each have sales of $175.If each of the remaining two firms have the same sales, then we can conclude that the remaining two firms each have a market share of

Accepted Answer

A) $125. 
B) $75. 
C) 0.15. 
D) 0.50. 
A) $125. 
B) $75. 
C) 0.15. 
D) 0.50.

Question 14

An industry consists of five firms with equal annual sales.What is the industry's HHI?

Accepted Answer

A) 2,000. 
B) 2,500. 
C) 10,000. 
D) There is not sufficient information to compute the industry HHI. 
A) 2,000. 
B) 2,500. 
C) 10,000. 
D) There is not sufficient information to compute the industry HHI.

Question 15

An unregulated industry has a Lerner index of zero.These numbers:

Accepted Answer

A) reveal that social welfare would be improved by regulating the firms. 
B) are consistent with the industry being monopolistically competitive. 
C) are consistent with the industry being perfectly competitive. 
D) reveal that social welfare would be improved by regulating the firms and are consistent with the industry being monopolistically competitive. 
A) reveal that social welfare would be improved by regulating the firms. 
B) are consistent with the industry being monopolistically competitive. 
C) are consistent with the industry being perfectly competitive. 
D) reveal that social welfare would be improved by regulating the firms and are consistent with the industry being monopolistically competitive.

Question 16

Which of the following are measures of industry concentration?

Accepted Answer

A) Four-firm concentration ratio. 
B) HHI index. 
C) Consumer surplus. 
D) Four-firm concentration ratio and HHI index. 
A) Four-firm concentration ratio. 
B) HHI index. 
C) Consumer surplus. 
D) Four-firm concentration ratio and HHI index.

Question 17

A student figured out that the HHI for an industry was 15,000.What is the proper conclusion?

Accepted Answer

A) The market is monopolistic. 
B) The market is close to perfectly competitive or monopolistically competitive. 
C) The student made some computational errors. 
D) There is free entry in the market. 
A) The market is monopolistic. 
B) The market is close to perfectly competitive or monopolistically competitive. 
C) The student made some computational errors. 
D) There is free entry in the market.

Question 18

A Herfindahl index of 10,000 suggests

Accepted Answer

A) perfect competition. 
B) monopolistic competition. 
C) monopoly. 
D) oligopoly. 
A) perfect competition. 
B) monopolistic competition. 
C) monopoly. 
D) oligopoly.

Question 19

Determine whether integration between the following types of firms would constitute a horizontal, vertical, or conglomerate merger.
a.A food company and a drug company.
b.A milk producer and a cheese producer.
c.A computer chip manufacturer and a silicon producer.

Accepted Answer

a.Conglomerate merger.
b.Under a broad d

Question 20

Suppose you read in an industry publication that the Rothschild index for the petroleum industry is 0.88.Based on past experience, you know that the price elasticity of demand for the petroleum products sold by your firm is -1.5.Based on this information you know that the elasticity of demand for a representative firm in the petroleum industry is

Accepted Answer

A) 1.32. 
B) 1.70. 
C) -0.587. 
D) -1.32. 
A) 1.32. 
B) 1.70. 
C) -0.587. 
D) -1.32.

The products in a monopolistically competitive industry are:

The tobacco industry has a Lerner index of 0.76.Based on this information, compute the optimal markup factor.

Which of the following is not a type of integration?

The causal view of the industry believes that

Which of the following integration types exploits economies of scope?

It is sometimes said that a manager of a monopoly can charge any price and customers will still have to buy the product.Do you agree or disagree? Why?

The industry elasticity of demand for gadgets is -2, while the elasticity of demand for an individual gadget manufacturer's product is -2.Based on the Rothschild approach to measuring market power, we conclude that

An industry is comprised of 25 firms, each with an equal market share.What is the 4-firm concentration ratio of this industry?

A student in a managerial economics class calculated the four-firm concentration ratio and HHI for industries A andB.What is the proper conclusion she can draw from the following findings?

Four firms control the market for a particular good resulting in an HHI of 2,900.Total industry sales are $500 and it is known that two firms each have sales of $175.If each of the remaining two firms have the same sales, then we can conclude that the remaining two firms each have a market share of

An industry consists of five firms with equal annual sales.What is the industry's HHI?

An unregulated industry has a Lerner index of zero.These numbers:

Which of the following are measures of industry concentration?

A student figured out that the HHI for an industry was 15,000.What is the proper conclusion?

A Herfindahl index of 10,000 suggests

Determine whether integration between the following types of firms would constitute a horizontal, vertical, or conglomerate merger. a.A food company and a drug company. b.A milk producer and a cheese producer. c.A computer chip manufacturer and a silicon producer.

The Fundamentals of Managerial Economics

Market Forces: Demand and Supply

Quantitative Demand Analysis

The Theory of Individual Behavior

The Production Process and Costs

The Organization of the Firm

Managing in Competitive, Monopolistic, and Monopolistically Competitive Markets

Basic Oligopoly Models

Game Theory: Inside Oligopoly

Pricing Strategies for Firms With Market Power

The Economics of Information

Advanced Topics in Business Strategy

A Managers Guide to Government in the Marketplace

Filters

Exam 7: The Nature of Industry

The products in a monopolistically competitive industry are:

The tobacco industry has a Lerner index of 0.76.Based on this information, compute the optimal markup factor.

Which of the following is not a type of integration?

The causal view of the industry believes that

Which of the following integration types exploits economies of scope?

It is sometimes said that a manager of a monopoly can charge any price and customers will still have to buy the product.Do you agree or disagree? Why?

The industry elasticity of demand for gadgets is -2, while the elasticity of demand for an individual gadget manufacturer's product is -2.Based on the Rothschild approach to measuring market power, we conclude that

An industry is comprised of 25 firms, each with an equal market share.What is the 4-firm concentration ratio of this industry?

A student in a managerial economics class calculated the four-firm concentration ratio and HHI for industries A andB.What is the proper conclusion she can draw from the following findings?

Four firms control the market for a particular good resulting in an HHI of 2,900.Total industry sales are $500 and it is known that two firms each have sales of $175.If each of the remaining two firms have the same sales, then we can conclude that the remaining two firms each have a market share of

An industry consists of five firms with equal annual sales.What is the industry's HHI?

An unregulated industry has a Lerner index of zero.These numbers:

Which of the following are measures of industry concentration?

A student figured out that the HHI for an industry was 15,000.What is the proper conclusion?

A Herfindahl index of 10,000 suggests

Determine whether integration between the following types of firms would constitute a horizontal, vertical, or conglomerate merger. a.A food company and a drug company. b.A milk producer and a cheese producer. c.A computer chip manufacturer and a silicon producer.

The Fundamentals of Managerial Economics

Market Forces: Demand and Supply

Quantitative Demand Analysis

The Theory of Individual Behavior

The Production Process and Costs

The Organization of the Firm

Managing in Competitive, Monopolistic, and Monopolistically Competitive Markets

Basic Oligopoly Models

Game Theory: Inside Oligopoly

Pricing Strategies for Firms With Market Power

The Economics of Information

Advanced Topics in Business Strategy

A Managers Guide to Government in the Marketplace

Filters