Q9 “”Based on the information given, indicate whether the following industry is best char-acterized by the model of perfect competition, monopoly, monopolistic competition, or oligopoly. (LO5)
a. Industry A has a four-firm concentration ratio of 0.005 percent and a Herfindahl-Hirschman index of 75. A representative firm has a Lerner index of 0.45 and a Rothschild index of 0.34.
b. Industry B has a four-firm concentration ratio of 0.0001 percent and Herfindahl-Hirschman index of 55. A representative firm has a Lerner index of 0.0034 and Rothschild index of 0.00023″
“c. Industry C has a four-firm concentration ratio of 100 percent and Herfindahl-Hirschman index of 10,000. A representative firm has a Lerner index of 0.4 and Rothschild index of 1.0.
d. Industry D has a four-firm concentration ratio of 100 percent and the Herfindahl-Hirschman index of 5,573. A representative firm has a Lerner index equal to 0.43 and Rothschild index of 0.76.”
Sample Solution
