there is easy access for any new firm to enter the market. There is very little restrictions from the government or inadequate access to vital resources. There is easy entry and exit from this type of industry and there is no concentration which means that the market is very competitive (Krugman & Robin, 2009). Concentration ratios (CR) are calculated established on the market shares of the most significant firms in that industry. One of the concepts, the four-firm CR over ninety percent of the
Words: 674 - Pages: 3
Econ 140, Sample Midterm I, Spring 2014 1. A firm has a total cost function of C(Q) = 50 + 10Q1/2. The firm experiences A. Economies of scale B. Constant returns to scale C. Diseconomies of scale D. All of the statements associated with this question are correct depending on the quantity Take derivative of Cost function with respect to Q to get marginal cost of Q. C’(Q) = 5 / Sqrt(q) Cost per unit decreasing as Q increases Thus the firm experiences economies of scale. If derivative
Words: 2979 - Pages: 12
oligopolist, and will discuss the consequences of their behaviour. As well, I will try to examine the statement "being an oligopolist is not easy", and whether it is true or whether the truth lies in between. Aspects of Market Structure The four types of market structure are listed in the drawing below: Characteristics of an oligopoly Definition Oligopoly is a type of imperfect competition with a market structure, that has only a small group of sellers which offers similar or even
Words: 2540 - Pages: 11
Economics Assignment #1 ECON 5100 Microeconomics 1. a) At the current price, $1.50, the theatre would sell 225 tickets. If b) = $1.50, then = 450 − 150 = 450 − 150(1.50) = 225 = 3 − 1 75 The marginal revenue curve is a derivative of the total revenue curve. To calculate total revenue, the demand curve needs to be solved for price rather than quantity (inverse demand curve) If = 450 − 150, then 1 =3− 150 = 1 = (3 − ) ( ) 150
Words: 3365 - Pages: 14
A. Large Number of Firms 1. Small Market Share 2. No Market Dominance 3. Collusion Impossible B. Product Differentiation C. Competing on Quality, Price, and Marketing 1. Quality 2. Price 3. Marketing D. Entry and Exit E. Identifying Monopolistic Competition 1. The Four-Firm Concentration Ratio 2. The Herfindahl-Hirschman Index 3. Limitations of Concentration Ratios 2. Explain how a firm in monopolistic competition
Words: 5193 - Pages: 21
Industry A Concentration ratios are used to measure the extent of competition in an industry by looking at the total output produced by the largest firms. Although there are several measures in the literature, generally the biggest four and biggest eight firms are considered (Cabral, 2000). A low concentration ratio is regarded as an industry with more competition and firms have very low control. The low concentration can be from 0 to 50 per cent and the industry can have a structure ranging from
Words: 967 - Pages: 4
DIVERSIFICATION THE U.S. PHARMACEUTICAL INDUSTRY1977-1986 W a CHARLES . L. HILL nd GARYS. HANSEN Graduate School of Business Administration, University of Washington, Seattle, Washington, U.S.A. The paper hypothesizes that diversification by firms based in the pharmaceutical industry during the 1977-86 time period was primarily undertaken to reduce the risks associated with being dependent upon a technologically dynamic environment. Consistent with this non-efficiency motive for diversification
Words: 5237 - Pages: 21
Owner, himself/herself is a firm as well as industry. Being the entire industry, the monopolist’s supply is big enough to affect prices. By decreasing output, the monopolist can force the price up. Increasing output will drive it down. The demand curve faced by a purely competitive firm is horizontal, perfectly elastic. Price is given and fixed and the firm faces a multitude of competitors, all producing perfect substitutes. In these circumstances, the purely competitive firm may sell all that it wishes
Words: 905 - Pages: 4
Summer 2011-Practice for Final Exam 1. A monopoly firm is different from a competitive firm in that: A. there are many substitutes for a monopolist's product while there are no substitutes for a competitive firm's product. B. a monopolist's demand curve is perfectly inelastic while a competitive firm's demand curve is perfectly elastic. C. a monopolist can influence market price while a competitive firm cannot. D. a competitive firm has a U-shaped average cost curve while a monopolist does
Words: 2976 - Pages: 12
MICROECONOMICS CONCENTRATION RATIOS OF INDUSTRIES IN THE PHILIPPINES Submitted to: Mr. Romano Angelico Ebron Date submitted: October 19, 2011 Subitted by: Chan, Jessica Clarisse R. Reyes, Diane Eunice M. BSA31 AIRLINE INDUSTRY Concentration ratio based on market share of the airline industry 2008 Market Share 1. Cebu Pacific 49.1% 2. Philippine Airline 41.0% 3. Zest Air 5.9% 4. Air Philippines 2.8% Concentration Ratio 98.8% 2009
Words: 2587 - Pages: 11
