Chapter 24 Flashcards
The concentration ratio is the percentage of ___ earned by the ___ largest firms in the industry.
sales; four
The tobacco, healthcare wholesale, and beverage industries all have a concentration ratio of over _____.
80
_____ is (are) legal in the United States.
Cut throat competition
A highly oligopolized industry would have a ______ Herfindahl-Hirschman Index and a ______ concentration ratio.
high; high
Which statement is false?
Oligopolies are illegal in most states.
A Herfindahl-Hirschman Index of 10,000 would mean there is (are) how many firm(s) in the industry?
1
The market structure in which the behavior of any given firm depends on the behavior of the other firms in the industry is
oligopoly.
Which one of these firms would be an oligopolist?
Proctor & Gamble
Which statement is false?
None is false.
Cigarettes, motor vehicles, and pipelines are industries with high concentration ratios.
Oligopolized industries have higher concentration ratios than monopolistic competitors.
The Electric Machinery Conspiracy case involved covert collusion.
Oligopoly is characterized by
high barriers to entry.
The closer the industry concentration ratio is to 100, the more likely it is that
there is a small number of large firms.
The highest concentration ratio
is in Industry Y.
The highest Herfindahl-Hirschman Index
is in Industry X.
An example of an oligopoly market would be one in which ___ firm(s) sell(s) ___% of the output.
4; 80
Each of the following is an oligopoly except
Microsoft (computer operating systems).
Which of the following represents an illegal control of prices?
Colluding
A cartel is
a group of firms acting under collusion to control output and maximize group profits.
Which of the following is a legal way to reduce the price problems oligopolies face?
Price leadership
If the market share of the largest firm in an industry is 50%, then theoretically, the highest possible Herfindahl-Hirschman Index for this industry would be
5,000
An industry with four firms each having a 25% market share would have a Herfindahl-Hirschman Index (HHI) of
2,500
At one end of the competitive spectrum is cutthroat competition. At the other end is (the)
cartel
A concentration ratio of 100 would imply that the industry has
no more than four firms
Corporate concentration can be measured by
both the concentration ratio and the Herfindahl-Hirschman index.
As foreign imports become a greater percentage of sales in oligopolized industries, the concentration ratio and the Herfindahl-Hirschman index
less accurate as a measure of concentration
Which statement is true?
The higher the concentration ratio, the higher the degree of oligopolization.
