Exam 5: Competitors and Competition

The average PCM (percentage contribution margin)in a Cournot equilibrium is given by the formula PCM=H/η,where H is the Herfindahl index and η is the price elasticity of market demand.Given this equation,which of the following statements is true?

What term describes the differentiation of a product when it is unambiguously better or worse than competing products?

Of the following industries listed,which one is generally thought of as having the highest search costs?

Suppose two hot dog stands,Al's & Bob's,position themselves at different ends of a 1000 yard stretch of beach.Assume there are 100 beach goers evenly distributed along the stretch of beach and travel costs are $.01 per yard.If Al charges $1 for his hot dogs and Bob charges $2 for his hot dogs,what is the cost of purchasing a hot dog from each stand for a hungry beachgoer situated at a position D yards from Al's end of the beach? How many consumers will go to Al's and how many will go to Bob's?

What is a catchment area?

What is defined by the number and size distribution of the firms in a market?

What empirical method generally is used to measure the degree to which products substitute for each other?

The Revenue Destruction Effect in oligopolies occurs when:

What kind of competition is generally described as price competition?

What criterion developed by the DOJ is used to identify all potential competitors within the market?

Which of the following is not a characteristic of substitute products X and Y?

Which of the following is a reason other than concentration that price-cost margins may vary across industries?

Based on Bresnahan and Reiss' study of the relationship between concentration and prices,how many firms did they determine generally need to be in a market for price competition to be as intense as it would likely get?

Recent studies have shown that increases in market concentration lead to which of the following?

In what type of market structure do sellers set identical prices and are prices generally driven down to marginal costs?

What term describes a firm that faces little or no competition in one of its input markets?

In a two firm market,let the marginal cost of producing a product be $20,the market demand be given by the function Q=60-P/2 and the market quantity be equal to Q₁+Q₂.What is the Cournot equilibrium quantity each firm would produce in this market?

Suppose the demand for a product faces by a monopolist firm is given by Q=60-P/2.If the marginal cost of producing the product is $20,what is the profit maximizing price the firm should charge for the product? What are the firm's profits?

In what type of market do the actions of individual firms materially affect the overall market?

What term describes existing firms in a monopolistically competitive market?