In the exercises on page 257, do problem number 4. Remember for the second part of the question you will use the Herfindahl (H) Index (page242 and 243). Make sure you use all the hospitals in each list and that you square the share of each hospital before you add them up. There is a YouTube video that may be helpful in Module 8.
Only one question is correct
84% and 679
36% and 3497
60% and 2135
74% and 1718
CITY 1 CITY 2
Hospital
Patients Days (000)
Hospital
Patient Days (0000
a
15
H
60
B
85
I
60
C
110
J
54
D
45
K
48
E
70
L
39
F
25
M
39
Compare the concentration of the markets in the two cities using the four-firm concentration ratio and the Herfindahl ( H ) index. According to this index, concentration is measured as H = î ( S / M ) 2 * 10,000 in which S is the size of each firm and M is the size of the total market. The figure 10,000 is used as a multiplier because H is usually presented as a sum of percentages expressed in absolute terms. The summation sign ( - ) indicates summation over all firms. Thus, if a monopolist with sales of $200 is the only firm in the market, its H index is (200 x 200) - 10,000, or 10,000. If there were three hospitals, each with sales of $100, the H index for that market would be 3,300 [ - (100/300) 2 * 10,000]. There is no true cutoff point for a concentrated versus a no concentrated market, although a figure of about 1,800 is sometimes used (Wilder & Jacobs, 1986). Generally, it is thought that the greater the degree of concentration, the greater will be the ability of the leading firms to influence price, quantity, and other characteristics of output.
In the exercises on page 257, do problem number 4. Remember for the second part of the question you will use the Herfindahl (H) Index (page242 and 243). Make sure you use all the hospitals in each list and that you square the share of each hospital before you add them up. There is a YouTube video that may be helpful in Module 8.
Only one question is correct
|
84% and 679 |
|
|
36% and 3497 |
|
60% and 2135 |
|
|
74% and 1718 |
CITY 1 CITY 2
|
Hospital |
Patients Days (000) |
Hospital |
Patient Days (0000 |
|
a |
15 |
H |
60 |
|
B |
85 |
I |
60 |
|
C |
110 |
J |
54 |
|
D |
45 |
K |
48 |
|
E |
70 |
L |
39 |
|
F |
25 |
M |
39 |
Compare the concentration of the markets in the two cities using the four-firm concentration ratio and the Herfindahl ( H ) index. According to this index, concentration is measured as H = î ( S / M ) 2 * 10,000 in which S is the size of each firm and M is the size of the total market. The figure 10,000 is used as a multiplier because H is usually presented as a sum of percentages expressed in absolute terms. The summation sign ( - ) indicates summation over all firms. Thus, if a monopolist with sales of $200 is the only firm in the market, its H index is (200 x 200) - 10,000, or 10,000. If there were three hospitals, each with sales of $100, the H index for that market would be 3,300 [ - (100/300) 2 * 10,000]. There is no true cutoff point for a concentrated versus a no concentrated market, although a figure of about 1,800 is sometimes used (Wilder & Jacobs, 1986). Generally, it is thought that the greater the degree of concentration, the greater will be the ability of the leading firms to influence price, quantity, and other characteristics of output.
