Multiple Choice QuestionIn general, industries that typically have lower Herfindahl index values are Blank______.Multiple choice question.monopolistically competitive rather than oligopolisticmonopolistic rather than oligopolisticoligopolistic rather than purely competitiveoligopolistic rather than monopolistically competitive
Question
Multiple Choice QuestionIn general, industries that typically have lower Herfindahl index values are Blank______.Multiple choice question.monopolistically competitive rather than oligopolisticmonopolistic rather than oligopolisticoligopolistic rather than purely competitiveoligopolistic rather than monopolistically competitive
Solution
The correct answer is "monopolistically competitive rather than oligopolistic".
Here's why:
The Herfindahl index is a measure of the size of firms in relation to the industry and an indicator of the amount of competition among them. It ranges from 0 to 1, where 0 indicates perfect competition and 1 indicates a monopoly.
Industries that are monopolistically competitive have many firms, each of which has a small market share. No single firm can influence the market price. This results in a lower Herfindahl index.
On the other hand, oligopolistic industries are dominated by a few large firms, each of which can influence the market price. This results in a higher Herfindahl index.
Therefore, industries that typically have lower Herfindahl index values are more likely to be monopolistically competitive rather than oligopolistic.
Similar Questions
Multiple Choice QuestionWhich statement is true about an industry and the Herfindahl index?Multiple choice question.The higher the index, the more likely an industry is monopolistically competitive.The lower the index, the more likely an industry is oligopolistic.The lower the index, the more likely the industry is monopolistically competitive.The higher the index, the more likely the industry is purely competitive.
Multiple Choice QuestionEntry to and exit from monopolistically competitive industries is Blank______.Multiple choice question.relatively easyrelatively difficultimpossibleundesirablecostless
Multiple Choice QuestionSuppose an industry has two firms each with 50% market share. The Herfindahl index for this industry is Blank______.Multiple choice question.50,000100,0005,0001,000
Multiple Choice QuestionOligopolies have Blank______.Multiple choice question.fewer firms than monopoliesthe same number of firms as monopolistic competitionthe same number of firms as perfect competitionmore firms than perfect competitionfewer firms than monopolistic competition
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