Exam 7: The Nature of Industry

Four firms control the market for a particular good, resulting in an HHI of 2,800. Total industry sales are $750, and it is known that one firm has sales of $300. If each of the remaining three firms has the same sales, then we can conclude that the remaining three firms each have a market share of:

The Lerner index in the paper industry is 0.58. Based on this information, a firm charging $3.25 per ream of paper should have a marginal cost of:

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 four-firm concentration ratio for industry A is:

Suppose each of the 50 states had only one gasoline station, and all stations were the same size. The four-firm concentration ratio, based on national data, would be:

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

When the relevant markets are local, the concentration and HHI based on figures for the entire United States tend to:

Which of the following integration types has the potential problem of increasing the firm's market power?

Producer and consumer surpluses are measures of:

An industry is comprised of 20 firms, each with an equal market share. What is the four-firm concentration ratio of this industry?

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 four-firm concentration ratio for industry B is:

Omega Travel competes in the highly competitive market for travel. Consumers know that Omega has the best agents in the industry and offers superior service. Nonetheless, Omega earns zero economic profits because numerous competitors have entered the market over the last few years. Based on this information, does Omega operate in a perfectly competitive market? Why or why not?

Which of the following is NOT a measure of market structure?

Zelda Manufacturing has a rather unique product that sells for $15 per unit, and the marginal cost is $7.50. Determine the Lerner index for Zelda Manufacturing. Does this index indicate market power?

An industry consists of six firms with annual sales of $300, $500, $400, $700, $600, and $600. What is the industry's C₄?

An industry consists of six firms with annual sales of $300, $500, $400, $700, $600, and $600. What is the industry's HHI?

The concentration and HHI reported in the U.S. Bureau of Census must be interpreted with caution since:

In perfect competition, which is NOT true?

Some firms find conglomerate mergers advantageous since they permit firms to:

A Herfindahl index of 10,000 suggests:

Which market structure has the most market power?