Choose ONE of the following industries: (1) Wireless (e.g., Sprint); (2) Automobile (e.g., Ford); or (3) Airlines (e.g., United) that are in an oligopolisticmarket structure, and then:
a.Research each of the firms in the industry to determine theirmarket shares (i.e., % sales) - list each in your paper.
b. Compute the concentration ratio (CR)and the HHI (show your work in your post) - the referent to write this is page 238 in the text. Note: to determine the four firm CR, just add the % market share of the four largest firms. Also, when squaring market share for the HHI do not convert sales % to a decimal but square the actual % sales number.
c. What do the CR and HHI indicate about the industry?
You must include your references. A good reference for data is:https://www.statista.com/
Save your work as a Word (doc ordocx) file and upload it here. Use 1" margins, double spacing, and 12 pointArial, Times NewRoman, or similar. Ensure you provide links to all your references.
. Statista - The Statistics X M worksheet - kavish287s x * Homework Help - Q&A x Chapter 13 Written Assi X https:/ewconnect.mh x M MHE Reader X + X C D A player-ui.mheducation.com/#/epub/sn_6f2b0#epubcfi(%2F6%2F352%5Bdata-uuid-65a2d1e17cde426cb097c186707266fc%5D!%2F4%2F14%5Bdata-uui. K ... Apps New Tab competitor. Because the pure monopolist is the industry, its demand curve is the market demand curve. And because market demand is not perfectly elastic, the monopolist's demand curve is downsloping. Columns 1 and 2 in Table 12.1 4 illustrate this concept. Note that quantity demanded increases as price decreases. TABLE 12.1 Revenue and Cost Data of a Pure Monopolist Revenue Data Cost Data (1) (2) (3) (4) (5) (6) (7) (8) Quantity Price (Average Total Revenue, Marginal Average Total Cost, Marginal Profit [+] of Output Revenue) (1) x (2) Revenue Total Cost (1) x (5) Cost or Loss [-] O $172 0 $162 $ 100 $ 90 $-100 162 162 $ 190.00 -28 142 190 80 N 152 304 135.00 +34 W 122 2707 70 142 4267 60 +86 102 113.33 340 132 528 82 100.00 400 70 +128 122 610 62 94.00 4707 80 +140 112 672: 42 91.67 550 90 +122 102 714 22 91.43 640 110 +74 8 92 736 : 93.75 750 2 130 -14 9 82 738 : 97.78 880 - 18 150 -142 10 72 720 103.00 1030 -310. Statista - The Statistics X M worksheet - kavish287s x * Homework Help - Q&A x Chapter 13 Written Assi X https:/ewconnect.mh x M MHE Reader X X > C D A player-ui.mheducation.com/#/epub/sn_6f2b0#epubcfi(%2F6%2F352%5Bdata-uuid-65a2d1e17cde426cb097c186707266fc%5D!%2F4%2F18%.. K Apps New Tab In Figure 10.7 4 we drew separate demand curves for the purely competitive industry and for a single firm in such an industry. But only a single demand curve is needed in pure monopoly because the firm and the industry are one and the same. We have graphed part of the demand data in Table 12.1 [[ as demand curve D in Figure 12.2 {). This is the monopolist's demand curve and the market demand curve. The downsloping demand curve has three implications that are essential to understanding the monopoly model. FIGURE 12.2 Price and marginal revenue in pure monopoly. A pure monopolist, or any other imperfect competitor with a downsloping demand curve such as D, must set a lower price in order to sell more output. Here, by charging $132 rather than $142, the monopolist sells an extra unit (the fourth unit) and gains $132 from that sale. But from this gain must be subtracted $30, which reflects the $10 less the monopolist charged for each of the first 3 units. Thus, the marginal revenue of the fourth unit is $102 (= $132 - $30), considerably less than its $132 price. $142, 3 units $142 132 Loss = $30 $132, 4 units Gain = $132 5 O Marginal Revenue Is Less Than Price With a fixed downsloping demand curve, the pure monopolist can increase sales only by charging a lower price. Consequently, marginal revenue-the change in total revenue associated with a one-unit change in output-is less than price (average revenue) for every unit of output except the first. Why so? The reason is that the lower price of the extra unit of output also applies to all prior units of output. The monopolist could have sold these prior units at a higher price if it had not produced and sold the Page 238. Statista - The Statistics X M worksheet - kavish287s x * Homework Help - Q&A x (_> Chapter 13 Written Assi X https:/ewconnect.mh x M MHE Reader X X > C D A player-ui.mheducation.com/#/epub/sn_6f2b0#epubcfi(%2F6%2F352%5Bdata-uuid-65a2d1e17cde426cb097c186707266fc%5D!%2F4%2F24%... K Apps New Tab Marginal Revenue Is Less Than Price With a fixed downsloping demand curve, the pure monopolist can increase sales only by charging a lower price. Consequently, marginal revenue-the change in total revenue associated with a one-unit change in output-is less than price (average revenue) for every unit of output except the first. Why so? The reason is that the lower price of the extra unit of output also applies to all prior units of output. The monopolist could have sold these prior units at a higher price if it had not produced and sold the Page 238 extra output. Each additional unit of output sold increases total revenue by an amount equal to its own price less the sum of the price cuts that apply to all prior units of output. Figure 12.2 2 confirms this point. There, we have highlighted two price-quantity combinations from the monopolist's demand curve. The monopolist can sell 1 more unit at $132 than it can at $142 and that way obtain $132 (the blue area) of extra revenue. But to sell that fourth unit for $132, the monopolist must also sell the first 3 units at $132 rather than $142. The $10 reduction in revenue on 3 units results in a $30 revenue loss (the red area). Thus, the net difference in total revenue from selling a fourth unit is $102: the $132 gain from the fourth unit minus the $30 forgone on the first 3 units. This net gain (marginal revenue) of $102 from the fourth unit is clearly less than the $132 price of the fourth unit. Column 4 in Table 12.1 { shows that marginal revenue is always less than the corresponding product price in column 2, except for the first unit of output. Because marginal revenue is the change in total revenue associated with each additional unit of output, the declining amounts of marginal revenue in column 4 mean that total revenue increases at a diminishing rate (as shown in column 3). We show the relationship between the monopolist's marginal-revenue curve and total-revenue curve in Figure 12.3 {) . For this figure, we extended the demand and revenue data of columns 1 through 4 in Table 12.1 () , assuming that each successive $10 price cut elicits 1 additional unit of sales. That is, the monopolist can sell 11 units at $62, 12 units at $52, and so on. FIGURE 12.3 Demand, marginal revenue, and total revenue for a pure monopolist. (8) Because it must lower price on all units sold in order to increase its sales, an imperfectly competitive firm's marginal-revenue curve (MR) lies below its downsloping demand curve (D). The elastic and inelastic regions of demand are highlighted. (b) Total revenue (TR) increases at a decreasing rate, reaches a maximum, and then declines. Note that in the elastic region, TR is increasing and hence MR is positive. When TR reaches its maximum, MR is zero. In the inelastic region of demand, TR is declining, so MR is negative
