o 50 MC 40 ATC 30 20 MR 0 10 20 30 40 5060 Quantity (units per day) The figure a

Question

o 50 MC 40 ATC 30 20 MR 0 10 20 30 40 5060 Quantity (units per day) The figure above shows the demand and cost curves for a single-price monopoly. What economic profit does this firm earn? A. zero B. $600 C. $400 D. $200 There are five firms in an industry with sales at $5 million, $10 million, $8 million, $12 million, and $10 million, respectively. What is the proper conclusion that we can draw from the calculated four-firm concentration ratio and HHI? A. B. Both measures indicate that the industry is not perfectly competitive. The four-firm measure suggests the industry is highly competitive, while the HHI suggests the industry is relatively uncompetitive C. The four-firm megests the industry is relatively uncompetitive, while the HHI suggests the industry is highly competitive. D. Both measures indicate the industry is served by a monopoly.

Explanation / Answer

1- a monopoly produces where MR = MC

HERE this happens at Q = 20,

so profits = (P-ATC)(Q) = 10*20 = 200

2- four firm concentration ratio = 10/45+8/45+12/45+10/45 = 40/45 = 0.88

now HHI = sum of squares of the market share of companies

25+100+64+144+100/2025 = 0.21

as per the Four firm ratio the industry is an oligopoly'

HHI also doesnt suggest that the idnustry is highly competitive

means answer is A

Related Questions

Navigate

• Browse (All)
• Browse O
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.