Exam 7: The Nature of Industry

The industry elasticity of demand for good X is -1.5, while the elasticity of demand for an individual manufacturer of good X is -9. Based on this information, the Rothschild index of market power is:

Which of the following may transform an industry from oligopoly to monopolistic competition?

A host of best-selling books advance the thesis that increases in conglomerate mergers and concentration of U.S. industry are responsible for "obscene profits." Do you agree? Explain, using the Lerner index.

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

Which of the following is NOT a type of integration?

"The law of comparative advantage suggests that managers should specialize in learning the tools needed to manage either a monopoly, oligopoly, monopolistically competitive, or perfectly competitive firm." Do you agree with this statement? Explain.

Which of the following integration types exploits economies of scope?

During a sales meeting, one of the regional managers of Toga Industries remarked that structural variables such as advertising and R&D activities by rival firms were likely to hamper the firm's sales over the next year. The manager received numerous stares after making the remarks. Why?

Borris Industries operates in an industry that has a Rothschild index of 0.75. The firm gained access to a government report that revealed the own-price elasticity of market demand within the industry to be -3. Use this information to obtain an estimate of the own-price elasticity of demand for the product produced by Borris Industries.

Suppose each of the 50 states had only one gasoline station, and all stations were the same size. The four-firm concentration ratio for the state of New York, based on the state data, is:

An industry consists of three firms with equal annual sales. What is the industry's C₄?

The Dansby-Willig index measures the potential for a change in:

An industry consists of four firms with annual sales of $3,000, $5,000, $4,000, and $6,000. What is the industry's HHI?

Suppose the market for good X has a four-firm concentration ratio of 0.80. Having worked for the four largest firms in the industry, you know the sales for these four firms are given by $100,000, $125,000, $150,000, and $175,000. Based on this information, we know that sales for the remaining firms in the industry are:

The Dansby-Willig index measures market:

The concentration and Herfindahl indices computed by the U.S. Bureau of Census must be interpreted with caution because:

An industry consists of six firms with annual sales of $300, $500, $400, $700, $600, and $600. According to the general rule of thumb, the HHI of this industry implies that the market structure is:

Which of the following are measures of industry concentration?

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:

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