Question

Select the correct answer:

The square of the percentage market share of each firm summed over the 50 largest firms is the (50-firm concentration ratio; Herfindahl-Hirschman Index).

A (cartel; duopoly) is a group of firms acting together to limit output, raise price, and increase economic profit.

In monopolistic competition there are a large number of firms producing (identical; differentiated) products.

Game theory is the main tool that economists use to analyze (irrational; strategic) behavior.

Answer 1

(A)

Suqare of the percentage market share of each firm summed is done in case of the Herfindahl-Hirschman Index.

The correct answer is the Herfindahl-Hirschman Index.

(B)

When a firm collude in order to limit output so that prices can be raised and economic profit can be increased then they are said to be forming cartel.

The correct answer is the cartel.

(C)

Monopolistic competition is characterized by the presence of large number of firms with each selling differentiated product.

The correct answer is the differentiated.

(D)

Economists generally use Game Theory to analyze the strategic behavior.

The correct answer is the strategic.