Exam 7: The Nature of Industry

Suppose that the demand in a particular industry is given by Q^d = 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 _________.

Suppose the market for good X has a four-firm concentration ratio of 0.70. Having worked for the four largest firms in the industry, you know the sales for these four firms are given by $200,000, $225,000, $250,000, and $275,000. Based on this information, we know that sales for the remaining firms in the industry are:

The idea of improving cash flow by exploiting the cyclical nature of different product lines is represented in:

Suppose that there are two industries, A and B. There are five firms in industry A with sales at $5 million, $2 million, $1 million, $1 million, and $1 million, respectively. There are four firms in industry B with equal sales of $2.5 million for each firm. The HHI for industry A is:

Oligopoly differs from monopoly as follows:

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:

Which of the following kinds of market structure are NOT associated with market power?

A firm has a marginal cost of $200 and charges a price of $500. The Lerner index for this firm is:

Which of the following industry structures would you expect to have the lowest Lerner index score?

Which of the following measures market structure?

An industry consists of eight firms with annual sales (in millions) of $200, $300, $900, $600, $300, $700, $500, and $600. What is the industry's C₄?

Suppose each of the 50 states had only one gasoline station, and all stations were the same size. The four-firm concentration ratio a consumer would experience is:

The widget industry is comprised of six firms of varying sizes. Firm 1 has 35 percent of the market. Firm 2 has 25 percent, and the remaining firms have 10 percent each. What is the Herfindahl-Hirschman index for the widget industry? Based on the U.S. Department of Justice merger guidelines described in the text, do you think the Justice Department would be likely to block a merger between firms 5 and 6?

Four firms control the market for a particular good, resulting in an HHI of 6,650. Total industry sales are $1,750, and it is known that one firm has sales of $1,400 and another sales of $175. If each of the remaining two firms has the same sales, then we can conclude that the remaining two firms each have a market share of:

Monopolistic competition is characterized by:

Pricing is an aspect of a firm's:

An industry consists of four firms with annual sales of $300, $500, $400, and $600, respectively. What is the industry's HHI?

In perfect competition, which is NOT true?

An industry is comprised of 10 firms, each with an equal market share. What is the four-firm concentration ratio of this industry?

Which of the following is used to measure market structure and performance?