Is this information sufficient to conclude that the aluminum market is less competitive than the market for refrigerators?Is this information sufficient to conclude that the aluminum market is less competitive than the market for refrigerators? Not necessarily. Although the HHI indicates a smaller number of firms, those firms may compete intensely.
How are the products sold by a monopolistically competitive firm different from the products sold in a competitive market?Answer: In a competitive market, the products sold by each producer are identical to the products sold by other firms. In other words, the products sold in a competitive market are homogeneous and are perfect substitutes for each other. However, in a monopolistically competitive market, the products are differentiated.
What happens to a monopolistically competitive firm?The monopolistically competitive firm decides on its profit-maximizing quantity and price similar to the way that a monopolist does. Since they face a downward sloping demand curve, the same considerations about how elasticity affects revenue are relevant, and the firm will maximize profits where MR = MC when P > MR.
What is an oligopoly and what effect did they have on business?An oligopoly refers to a market structure that consists of a small number of firms, who together have substantial influence over a certain industry or market. While the group holds a great deal of market power, no one company within the group has enough sway to undermine the others or steal market share.
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Suppose the refrigerator industry has an hhi of 2,500 while the aluminum industrys hhi is 6,850.
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