The four-firm concentration ratio for gasoline stations is 9 and for computer hard drives it is 71. The HHI for gasoline stations is 68 and for computer hard drives it is 2,982. Which of these markets is an example of monopolistic competition? The gasoline station market ______ an example of monopolistic competition. The computer hard drive market ______ an example of monopolistic competition. A. is not; is B. is not; is not C. is; is not D. is; is
Added by Sherry P.
Close
Step 1
Step 1: Monopolistic competition is a market structure characterized by a large number of firms, differentiated products, and easy entry and exit. Show more…
Show all steps
Your feedback will help us improve your experience
Jennifer Stoner and 63 other Microeconomics educators are ready to help you.
Ask a new question
Labs
Want to see this concept in action?
Explore this concept interactively to see how it behaves as you change inputs.
Key Concepts
Recommended Videos
The accompanying table shows the HerfindahlHirschman Index (HHI) for the restaurant, cereal, movie, and laundry detergent industries as well as the advertising expenditures of the top 10 firms in each industry. Use the information in the table to answer the following questions. $$ \begin{array}{l|r|c} \text { Industry } & \text { HHI } & \begin{array}{c} \text { Advertising expenditures } \\ \text { (millions) } \end{array} \\ \text { Restaurants } & 179 & \$ 1,784 \\ \text { Cereal } & 2,098 & 732 \\ \text { Movie studios } & 918 & 3,324 \\ \text { Laundry detergent } & 2,068 & 132 \end{array} $$ a. Which market structure-oligopoly or monopolistic competition-best characterizes each of the industries? b. Based on your answer to part a, which type of market structure has higher advertising expenditures? Use the characteristics of each market structure to explain why this relationship might exist.
Concentration and Market Power [50 total] a) The table on the right shows market shares in the UK personal computer market in July 2018. Assuming that 'others' is comprised of 23 different firms, each with 1% market share, calculate the following measures of concentration for this industry: * 4-firm, 8-firm, 20- firm and 50-firm concentration ratios; * The Herfindahl (HHI) index. [10] b) You have been allocated four six-digit NAICS industries in the appendix at the end of this problem set. Select two of these industries i. For each of the two industries, using the 2012 US Economic Census data (which can be found here), report the following: * The NAICS code, and industry descriptor; * 4-firm, 8-firm, 20- firm and 50-firm concentration indices; * The Herfindahl (HHI) index for the 50 largest firms. [5] ii. Provide brief evidence (with hyperlinks to relevant sources) regarding the nature of competition in the two industries. What do you view as the key strategic variables in the industries? [20] iii. How good a proxy for market power are concentration measures likely to be in the two industries? [15] 2. Comparing Market Structures with Differentiated Goods [50 total] The market for widgets is dominated by two firms which produce differentiated versions of the widget. Patents prevent any other firms from entering the market. The firms face demand curves as follows: q1 = 360 - p1 + 0.5p2
Adi S.
(Mergers and Public Policy) Calculate the Herfindahl-Hirschman Index (HHI) for each of the following industries. Which industry is the most concentrated? An industry with five firms that have the following market shares: 50 percent, 30 percent, 10 percent, 5 percent, and 5 percent. An industry with five firms that have the following market shares: 60 percent, 20 percent, 10 percent, 5 percent, and 5 percent. An industry with five firms, each of which has a 20 percent market share.
Akash M.
Recommended Textbooks
Principles of Economics
Principles of Microeconomics for AP® Courses
Economics
Transcript
18,000,000+
Students on Numerade
Trusted by students at 8,000+ universities
Watch the video solution with this free unlock.
EMAIL
PASSWORD