Microeconomics
13th Edition
ISBN: 9781337617406
Author: Roger A. Arnold
Publisher: Cengage Learning
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Chapter 12, Problem 3QP
To determine
Determine the difference between four-firm concentration ration and Herfindahl index.
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what is the Four-firm concentration ratio (CR4)?
what is the Herfindahl-Hirshman Index (HHI)?
and how are they different?
Based on this information, the four-firm concentration ratio is?
Why is the graph of the cartel drawn exactly the same as the monopoly graph?
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- Is it true that a merger between two films that are not already in the top four by size can affect both the four-firm concentration ratio and the Herfindahl-Hirshmau Index? Explain briefly.arrow_forwardIs it true that the four-firm concentration ratio puts more emphasis on one or two very large films, while the Herfindahl-Hirshmau Index puts more emphasis on all the films in the entire market? Explain briefly.arrow_forwardQuestion C2 The Australian Competition and Consumer Commission (ACCC) has opened an investigation regarding collusion between the two major firms producing fire protection gear for bush firefighters. The firms - Azure Associates and Blue Guard - contend that they are quantity competitors and that the prices they are charging are a result of an increase in price by their suppliers. As part of the case, the ACCC has noted that the Australian firefighters typically purchase their own protective gear and are thus price takers in the market. Both the ACCC and the two firms under investigation agree that the market demand can be described by the inverse demand function: P(Q)=240-Q, where Q is the total quantity provided by the two firms (i.e., Q=q₁ + 9B, where is the 9A amount produced by Azure Associates and q, is the amount produced by Blue Guard). All parties also agree that the two firms have identical production technologies and that the two firms have the same constant marginal cost of…arrow_forward
- The following table presents information on the production of five firms that produce all of the output in an industry. Firm A B с D E Output (units) 900 900 900 100 100 Instructions: Round your answers to two decimal places. a. What is the four-firm concentration ratio for this industry? b. What is the Herfindahl-Hirschman Index for this industry?arrow_forwardWhat makes a firm become a natural monopolist, and how does it become a barrier to entry of new firms? Explain.arrow_forwardWhat are the main characteristic/assumption of monopoly market structure?arrow_forward
- I am intrigued by the following article detailing how Nestle agreed to pay Starbucks $7.2B to distribute and sell Starbucks’ packaged coffees and teas around the world. Why would Nestle purposely put its competitors’ brands right next to it in the store, and then pay them for the privilege? Why wouldn’t Starbucks just take care of distributing its own brands rather than go through Nestle? Please explain how this outcome could be profit maximizing for both firmsarrow_forwardWhat are the advantages and disadvantages of NATURAL monopolies?arrow_forwardIs the following statement correct? "The antitrust laws in reality deal less with monopolies than with oligopolies."arrow_forward
- Read “YOU’RE THE ECONOMIST: The Standard Oil Monopoly” in Chapter 9. If Standard Oil was a natural monopoly, what would happen to the average cost of producing gasoline after the company was split up? Explain using an LRAC curve.arrow_forwardList several reasons that monopolies exist,and explain how each causes barriers to entryarrow_forwardUse the following table to calculate the four=firm concentration ratio for the U. S. auto market. Does this indicate a concentrated market or not? The table is............. GM 19% Ford 17% Toyota 14% Chrysler 11%arrow_forward
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