Consider two different oligopoly markets, A and B, each with three firms. In Mar

Question

Consider two different oligopoly markets, A and B, each with three firms. In Market A, the three firms control 50%, 25%, and 25% of the market, respectively. In Market B, the three firms control 60%, 20%, and 20% of the market, respectively, which market is more concentrated? 6. a. b. c. d. Market A Market B They are the same because the both have only three firms Not enough information to answer 7. Oligopolistic firms cooperating with each other to raise the profits of the group as a whole is referred to as a. collusion b. imperfect competition c. price discrimination d. price gouging

Explanation / Answer

6. The correct answer is: a)

Reason: the HHI index of market A = 50^2 + 25^2 + 25^2

HHIa = 3750

And, similarly, HHIb = 60^2 + 20^2 + 20^2 = 4000.

Since, HHIa < HHIb, market A is more concentrated.

7. The correct answer is: a)

Reason: collusion is a practice where firms in an oligopolistic market collude to regulate prices and earn higher profits.

Thanks!

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

---