University:
Bradley University
Course:
ECO 199 | Foundational Topics in Economics
Academic year:

2023
Views:

377

Pages:

2
Author:

Carissa Thomas

Short Answer – Create a brief answer to the following questions. 1. What is an oligopoly? 2. How does the Herfindahl-Hirschmann Index (HHI) provide more detail about market concentration than a concentration ratio? 3. Why might a firm choose vertical integration over horizontal integration? 4. How can a conglomerate merger help a company survive in times of economic downturn? 5. Why do cartels often break down over time? 6. How does game theory help economists understand the behavior of firms in oligopolistic markets? 7. Why was the Sherman Antitrust Act of 1890 considered a turning point in U.S. business regulation? 8. How do antitrust laws protect competition and consumers in modern markets? Answers 1. A market where a few large firms serve substantial amounts of the market (have large market shares). 2. It squares market shares, giving greater weight to larger firms and revealing hidden dominance not seen in simple sums. 3. To gain control over supply chains, reduce input costs, and eliminate uncertainty from supplier pricing or availability. 4. By diversifying across different industries, reducing risk if one part of the business experiences losses. 5. Because individual firms have an incentive to cheat to increase their own profits by undercutting the agreed-upon price. 6. It models strategic interactions, helping predict outcomes when firms anticipate and react to rivals' moves. 7. It marked the first time the U.S. government attempted to limit monopolistic practices and encourage fair competition. 8. By preventing practices like collusion, monopolization, and unfair mergers, ensuring a level playing field and protecting consumers from high prices or limited choices.