ECON 2 Lecture Notes - Lecture 23: Herfindahl Index, Bid Rigging, Monopolistic Competition

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magentamuskrat366

9 Aug 2020

School

Irvine Valley College

Department

Economics

Course

ECON 2

Professor

Collinson

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Document Summary

Monopolistic competition: a market structure with few barriers to entry and many firms that sell a differentiated product and have some control over price. Oligopoly: a market structure with difficult entry and few firms that produce most of the product supply. Collusion: an agreement among producers to fix prices or restrict competition. Equilibrium price: the price when there is no surplus or shortage; when quantity supplied and quantity demanded are in balance and equal. Concentration ratio: the percentage of the total sales of a particular industry that is produced by the largest firms in the industry. Herfindahl index: an index of market concentration that takes into account the market share of each firm in the industry. Game theory: a study of decision making in situations involving strategic interactions between rivals. Cartel: a group of producers with an explicit agreement fixing price and shares of output that each will supply to the market.

Related Questions

1. Which market structure is characterized by a few interdependent firms?

A) Monopoly.

B) Perfect competition.

C) Monopolist competition.

D) Oligopoly.

2. The correct ranking (put in order) of the degree of market power (from highest to lowest) is

A) Monopoly, monopolistic competition, perfect competition, oligopoly

B) Monopoly, monopolistic competition, oligopoly, perfect competition.

C) Monopoly, oligopoly, monopolistic competition, perfect competition.

D) Oligopoly, monopoly, monopolistic competition, perfect competition.

3. The term monopolistic competition

A) is an alternate expression for monopoly

B) is used to describe perfect competition with strong entry barriers.

C) denotes an industry with one seller of many differentiated products

D) denotes an industry with many sellers of differentiated products.

ceruleanseal203

1) A natural monopoly exists when:

a. A few firms collude to make one large firm

b. Firms enter the industry as a result of profit incentives

c. Economies of scale provide large cost advantages to having one firm produce the industry's output

d. Firms naturally maximize regardless of market structure

2) A(n) ____ is a single firm with ___, whereas a(n) ___ implies an industry with ____ firm(s) and ____ .

a. Monopoly; barriers to entry; oligopoly; few; no barriers to entry

b. Oligopoly; no barriers to entry; monopoly; many; easy entry and exit

c. Monopoly; barriers to entry; monopolistic competition; many; easy entry and exit

d. Monopolistic competitor; barriers to entry; monopoly; one; barriers to entry

3) In monopolistic competition:

a. Each firm produces a product identical to that of every other firm in the industry

b. Firms are aware of their strategic interdependence

c. Firms earn large economic profits in the long run

d. Firms earn zero economic profits in the long run

4) A monopolistically competitive industry, such as corn snack chips, and a perfectly competitive industry, like wheat farming, are alike in that:

a. There are many firms in each industry

b. Firms in both types of industries produce similar but not identical products

c. Barriers to entry in both industries are large

d. Firms in both types of industries produce identical products

byzantiumfish483

1. A monopoly market structure is characterized by

a. large number of firms, standardized products, easy entry and exit.

b. large number of firms, differentiated products, easy entry and exit.

C. small number of firms, standardized or differentiated products, difficult entry.

d. one firm, a unique product without close substitutes, and impossible entry.

e. one firm, differentiated product, impossible entry.

2. Which of the following is not a characteristic of monopolistic competition?

a. Differentiated products

b. A downward-sloping demand curve for individual firms

c. Firms that are price makers

d. Impeded entry into the industry

e. A large number of firms

3. One factor that distinguishes oligopoly from other market structures is

a. the ease of entry into the market.

b. the interdependence of firms.

c. the slope of the demand curve.

d. the degree of product differentiation.

e. the amount of advertising expenditures.

lavenderbat941

ECON 2 Lecture Notes - Lecture 23: Herfindahl Index, Bid Rigging, Monopolistic Competition

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