Econ 444 Problem Set #1
Econ 444 Problem Set #1
Econ 444 Problem Set #1
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Name<br />
ACME Industries Beta Inc.<br />
Caltech<br />
Douglass Ltd. Gramen Inc. Houghton Enterprises Jenentech<br />
1. Use this information to calculate CR3<br />
2. Calculate CR5 for the industry.<br />
3. What is the HHI for the industry?<br />
Sales (millions) 50 18 18 4 11 22 5<br />
4. Can you use this information alone to calculate the Lerner Index? Explain why or why<br />
not. What information would you need?<br />
<strong>Problem</strong> 5. True or False. In each part, state whether the sentence is true or false and<br />
explain your assertion. You will receive half the credit for the correct answer and half the<br />
credit for the correct explanation.<br />
1. In a perfectly competitive market, firms produce optimally at the point where<br />
marginal revenue equals marginal cost.<br />
2. A monopolist may sometimes produce on the inelastic portion of the demand<br />
curve.<br />
3. In equilibrium, the quantity produced by a monopolist is greater when (downward<br />
sloping) demand is more inelastic.
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