Which of the following is a shortcoming of concentration ratios as measures of monopoly power? O The data are for international products. O They only show the dispersion of size among the top four firms. O They do not account for interindustry competition. O They do not pertain to the nation as a whole. b. Suppose that the five firms in industry A have annual sales of 30, 30, 20, 10, and 10 percent of total industry sales. For the five firms in industry B, the figures are 60, 25, 5, 5, and 5 percent. Calculate the Herfindahl index for each industry and compare their likely competitiveness. Herfindahl index for industry A = Herfindahl index for industry B =
Which of the following is a shortcoming of concentration ratios as measures of monopoly power? O The data are for international products. O They only show the dispersion of size among the top four firms. O They do not account for interindustry competition. O They do not pertain to the nation as a whole. b. Suppose that the five firms in industry A have annual sales of 30, 30, 20, 10, and 10 percent of total industry sales. For the five firms in industry B, the figures are 60, 25, 5, 5, and 5 percent. Calculate the Herfindahl index for each industry and compare their likely competitiveness. Herfindahl index for industry A = Herfindahl index for industry B =
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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![**Which of the following is a shortcoming of concentration ratios as measures of monopoly power?**
- ○ The data are for international products.
- ○ They only show the dispersion of size among the top four firms.
- ○ They do not account for interindustry competition.
- ○ They do not pertain to the nation as a whole.
**b.** Suppose that the five firms in industry A have annual sales of 30, 30, 20, 10, and 10 percent of total industry sales. For the five firms in industry B, the figures are 60, 25, 5, 5, and 5 percent. Calculate the Herfindahl index for each industry and compare their likely competitiveness.
- Herfindahl index for industry A = [ ]
- Herfindahl index for industry B = [ ]
Your comparison of their likely competitiveness: Industry A will be (Click to select) more competitive / less competitive than industry B.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F8ea3a059-0a8a-4779-bed8-ef5706e6b286%2F699eb61b-0ce3-46b3-afec-b68c2a34bac0%2F2ngb7tq_processed.jpeg&w=3840&q=75)
Transcribed Image Text:**Which of the following is a shortcoming of concentration ratios as measures of monopoly power?**
- ○ The data are for international products.
- ○ They only show the dispersion of size among the top four firms.
- ○ They do not account for interindustry competition.
- ○ They do not pertain to the nation as a whole.
**b.** Suppose that the five firms in industry A have annual sales of 30, 30, 20, 10, and 10 percent of total industry sales. For the five firms in industry B, the figures are 60, 25, 5, 5, and 5 percent. Calculate the Herfindahl index for each industry and compare their likely competitiveness.
- Herfindahl index for industry A = [ ]
- Herfindahl index for industry B = [ ]
Your comparison of their likely competitiveness: Industry A will be (Click to select) more competitive / less competitive than industry B.
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