Which of the following is true about the concept of concentration? All of the answers are correct. The lower the number of firms in a market, the lower the concentration. The higher the degree of rivalry amongst the firms, the lower the concentration. The lower the degree of rivalry amongst the firms, the higher the concentration.

Market concentration is defined as the level to which a particular market is controlled by a few…

Answered: Which of the following is true about…

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter9: Market Structure And Long-run Equilibrium

Section: Chapter Questions

Problem 4MC

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The figure below illustrates the market for steel. If the steel market is competitive, firms can produce steel at a constant marginal cost of $100 per ton. Therefore, the price of steel is $100 per ton, and 100 tons are produced. Assume that if all the steel companies consolidate into a monopoly, the monopoly marginal cost will fall to $70 per ton. Use the straight line tool to draw the monopoly marginal revenue and marginal cost lines (extend the marginal cost line to 300 tons). Then use the plot point tool to plot the monopoly profit maximizing price and output on the demand curve. Part 2. If the market is competitive, total surplus is $ _________ Part 3. If the market is controlled by a monopoly, total surplus is $________
The auto industry in the U.S. has long been dominated by the Big Three carmakers: Ford, General Motors, and Chrysler. The auto industry in China, on the other hand, has more than 170 carmakers. Automakers in the U.S. have some monopoly power while the car market in China has the characteristics of a perfectly competitive market. Based on these differences in market characteristics, explain how car makers in the U.S. will “behave” compared to carmakers in China. In particular, address the following considerations: How will carmakers in the U.S. respond to consumers’ desires compared to Chinese carmakers’ response to consumers’ desires, everything else being equal?
The auto industry in the U.S. has long been dominated by the Big Three carmakers: Ford, General Motors, and Chrysler. The auto industry in China, on the other hand, has more than 170 carmakers. Automakers in the U.S. have some monopoly power while the car market in China has the characteristics of a perfectly competitive market. Based on these differences in market characteristics, explain how car makers in the U.S. will “behave” compared to carmakers in China. In particular, address the following considerations: How will the price of cars in the U.S. compare to the price of cars in China, everything else being equal?
The auto industry in the U.S. has long been dominated by the Big Three carmakers: Ford, General Motors, and Chrysler. The auto industry in China, on the other hand, has more than 170 carmakers. Automakers in the U.S. have some monopoly power while the car market in China has the characteristics of a perfectly competitive market. Based on these differences in market characteristics, explain how car makers in the U.S. will “behave” compared to carmakers in China. In particular, address the following considerations: How will the profits of carmakers in the U.S. compare to the profits of carmakers in China, everything else being equal?
Monopoly outcome versus perfectly competitive outcome Consider the daily market for hot dogs in a small city. Suppose that this market is in long-run perfectly competitive equilibrium, with many hot dog stands in the city, each one selling the same kind of hot dogs. Therefore, each vendor is a price taker and possesses no market power. The following graph shows the demand (D) and supply curves (S = MC) in the market for hot dogs. Place the black point (plus symbol) on the graph to indicate the market price and quantity that will result from perfect competition. Use the green point (triangle symbol) to shade the area that represents consumers’ surplus, and use the purple point (diamond symbol) to shade the area that represents producers’ surplus. (graph 1) Assume that one of the hot dog vendors successfully lobbies the city council to obtain the exclusive right to sell hot dogs within the city limits. This firm buys up all the rest of the hot dog vendors in the city and…
Suppose there are only two gas stations in the remote town of Nome, Alaska and they are competitors. If one of them goes out of business, what will happen to the demand curve for the remaining gas station? In addition, what do you think will happen to prices? The graph below shows a demand for gasoline, with the price of gas and the sales of gas shown below on the graph. P P1 14 22 P2 32 D2 D1 Q1 Q2 Q3 The demand curve will pivot from D1 to D2 and prices will rise as demand becomes more inelastic. The demand will shift to the left, indicating lower demand when there are fewer stations. The demand curve will not change since everyone needs gas no matter what the price. The demand curve will pivot from D2 to D1 and prices will rise as demand becomes more inelastic. 00
Competition and the Invisible Hand: End of Chapter Problem Let’s take a look at Invisible Hand Property 2 in action using a mathematical example. Suppose an industry is characterized by the following equations. We’re going to assume that all individual firms are identical to make this problem a little simpler. Demand: ??=100−2?QD=100−2⁢P Individual firm's supply: ??=0.5+0.1?qS=0.5+0.1⁢P Market supply with n firms: ??=?×??=0.5?+0.1??QS=n×qS=0.5⁢n+0.1⁢n⁢P Individual firm's average cost: ??=5??−5+24.2??A⁢C=5⁢qS−5+24.2qS a. Suppose 24 firms are in this industry. What is the equation for market supply? QS =
1. Which of the following companies most closely resembles a monopoly? Walmart Microsoft Starbucks McDonald's Question Source: Chiang 4e - Economics Princip 39 36 近

The daily demand for bungee jumping over a river in South Africa is given by Q=5000-200P. There are two firms operating and the first one has a daily capacity of 600 people and the second one of 400 people. The marginal cost of operation is 5 for both firms. The two firms compete in prices and announce their prices simultaneously. Calculate the price and profits of both firms.
Evaluate the following: “Since a rival’s profit-maximizing price and output depend on its marginal cost and not its fixed costs, a firm cannot profitably lessen competition by implementing a strategy that raises its rival’s fixed costs.”
Suppose a country's mobile phone industry is supplied by only two firms (i.e. an oligopoly). Explain how the presence of two firms affects the price elasticity of demand of each firm's output.
It is illegal for any two firms that sell similar products to engage in price-fixing agreements. Violating the anti-trust laws can bring both civil and criminal prosecutions. Nevertheless, price-fixing does take place. Examples would be found at the service plazas along the NY State Thruway and the NJ Turnpike. Each location has a small number of fast-food restaurants. Each fast food restaurant belongs to a different firm, which should create competition, yet at service plazas, all have uncommonly high prices. Draw a prisoner’s dilemma type of game (2x2) to show the pricing choices and strategies of two competing fast-food restaurants, located at one service plaza. Payoffs are daily profits. Create sensible numbers. Write a brief explanation for the different numbers that you have created. Identify John Nash’s equilibrium, as well as the optimal outcome for the two fast-food outlets. Also, find and label any strictly dominant strategies. Actual long-run pricing results at…

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	Which of the following is true about the concept of concentration?
	All of the answers are correct.
	The lower the number of firms in a market, the lower the concentration.
	The higher the degree of rivalry amongst the firms, the lower the concentration.
	The lower the degree of rivalry amongst the firms, the higher the concentration.