Question

Based on the information given, indicate whether the following industry is best characterized by the model of perfect competition, monopoly, monopolistic competition, or oligopoly.

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 of 1.0.

d. Industry D has a four-firm concentration ratio of 100 percent and Herfindahl-Hirschman index of 5,573. A representative firm has a Lerner index equal to 0.43 and Rothschild index of 0.76

Answer 1

a- monopolistic competition

b- perfect competition

c- monopoly

d- oligopoly

Step-by-step explanation:

Industry A is a monopolistically competitive industry

Industry B is a perfectly competitive industry

Industry C is a monopoly industry

Industry D is an oligopoly industry