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4 marksMarket Structure

CAPE Economics Unit 1 · 2012 · Paper 2 · Question 3(c)(i)b)

An industry comprises 10 firms with the following sales: ABC Corporation 1,650; FBN Corporation 1,400; ATT Corporation 1,350; GNC Corporation 1,200; and six other firms each with sales of $500.

Calculate the Herfindahl-Hirschman Index for the industry.

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Other parts of this question

  1. 3(a)(i)State the difference between 'normal profit' and 'positive economic profit' (abnormal profit).[3 marks]
  2. 3(a)(ii)Explain the concept of 'market structure'.[2 marks]
  3. 3(b)Distinguish among the four major market structures based on: the number of firms in the industry, the product, barriers to entry, and control over price.[8 marks]
  4. 3(c)(i)a)Calculate the Four-Firm Concentration Ratio for the industry.[4 marks]
  5. 3(c)(ii)Interpret the two measures of industrial concentration calculated in relation to market structures.[4 marks]

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