Module 12.3 - Identifying Market Structures Flashcards
(24 cards)
What is the characteristic of the number of sellers in perfect competition?
Many firms
What is the characteristic of barriers to entry in monopolistic competition?
Low
What type of competition is present in oligopoly?
Price, marketing, features
In monopoly, what is the nature of substitute products?
No good substitutes
What is the pricing power in perfect competition?
None
Fill in the blank: The N-firm concentration ratio is calculated as the sum of the percentage market shares of the largest ______ firms in a market.
[N]
What is a limitation of the N-firm concentration ratio?
Relatively insensitive to mergers of firms within an industry
What does the Herfindahl-Hirschman Index (HHI) measure?
Market concentration
better than N-Firm comparison
True or False: Barriers to entry are considered in the N-firm concentration ratio.
False
What factor can lead to high elasticity of demand despite high market shares?
Low barriers to entry
What is the nature of competition in perfect competition?
Price only
What is the characteristic of substitute products in monopolistic competition?
Good substitutes, but differentiated
What is the pricing power in monopoly?
Significant
Fill in the blank: Regulators often use ______ to measure the degree of monopoly or market power of firms.
[market shares]
What is the nature of competition in monopoly?
Advertising
What are the characteristics of market structures? List them.
- Number of sellers
- Barriers to entry
- Nature of substitute products
- Nature of competition
- Pricing power
What is the characteristic of the number of sellers in perfect competition?
Many firms
In monopoly, what is the nature of substitute products?
No good substitutes
What is the pricing power in perfect competition?
None
Fill in the blank: The N-firm concentration ratio is calculated as the sum of the percentage market shares of the largest ______ firms in a market.
[N]
What is a limitation of the N-firm concentration ratio?
Relatively insensitive to mergers of firms within an industry
What does the Herfindahl-Hirschman Index (HHI) measure?
Market concentration
True or False: Barriers to entry are considered in the N-firm concentration ratio.
False
What factor can lead to high elasticity of demand despite high market shares?
Low barriers to entry
