Economics

1. (1) | Which of the following measures market structure? | Four-firm concentration ratio |

| Lerner index |

| Herfindahl-Hirschman index |

| All of the choices may be used to make inferences about market structure. |

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2. (1) | An industry consists of four firms with annual sales of $300, $500, $400, and $600, respectively. What is the industry's HHI? | 1,659 |

| 2,654 |

| 10,000 |

| There is not sufficient information to compute the industry HHI. |

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3. (1) | Suppose the market for good X has a four-firm concentration ratio of 0.70. Having worked for the four largest firms in the industry, you know the sales for these four firms are given by $2,000,000, $2,250,000, $2,500,000, and $2,750,000. Based on this information, we know that sales for the remaining firms in the industry are: | $9,433,320. |

| $6,875,000. |

| $5,505,000. |

| $4,071,430. |

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4. (1) | A Herfindahl index of 10,000 suggests: | perfect competition. |

| monopolistic competition. |

| monopoly. |

| oligopoly. |

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5. (1) | A Lerner index of 0 suggests: | monopoly. |

| monopolistic competition. |

| oligopoly. |

| perfect competition. |

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6. (1) | In perfect competition, which is NOT true? | Every firm has a small but perceivable market power. |

| There are a large number of firms. |

| Firms are price-takers. |

| Firms produce homogenous goods. |

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7. (1) | A student in a managerial economics class calculated the four-firm concentration ratio and HHI for industries A and B. What is the proper conclusion she can draw from the following findings?   | Industry B is a monopoly. |

| The market power of firms in industry A is greater than that in industry B. |

| C4 is higher for industry A while the HHI is higher for industry B. This inconsistency must be due to a calculation error. |

| Neither industry is perfectly competitive. |

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8. (1) | In the 1960s, each firm in the computer industry was able to make...