Question

In: Economics

a. How luck (or randomness, or industry instability) can lead to concentrated market structure

 

a. How luck (or randomness, or industry instability) can lead to concentrated market structure


b.  Economies of Scale/Minimum Efficient Scale

c.  Discount rates (rates of time preference) and their role in promoting collusion in oligopoly

Solutions

Expert Solution

 

  1. Luck, randomness and industrial stability plays a vital role in resulting in concentrated market structure. Many at times luck works much better than practicality and assumptions in the market structure. The industrial stability is needed for better working conditions and a good market structure.
  2. The economies of scale are the cost advantages that are reaped by the companies when the production becomes efficient enough. The companies would achieve the economies of scale due to increase in production and lower the costs. This happens due to the costs being spread over the larger number of commodities. It can be internal and external as well.
  3. Discount rate is the interest rate which is charged to the commercial banks and many other financial institutions for loans which they take from the Federal Reserve Bank through the discount window and loan process. It refers to the interest rates which are used in discounted cash flow. The discount factor affects the oligopoly prices in a certain way.

Related Solutions

Examine how the market structure impacts Amazon’s performance in each industry
Examine how the market structure impacts Amazon’s performance in each industry
Political instability can often lead to economic volatility, reduced growth, and capital flight. For example, in...
Political instability can often lead to economic volatility, reduced growth, and capital flight. For example, in recent times this can be seen in Venezuela. Research the economic situation there (or in another country that has gone through turmoil) and discuss with the group what you learned about the impact of political instability on the economy. Can you offer us any examples of the consequences that instability has brought?
Describe two ways that financial market instability may lead to adverse effects on real economic activity....
Describe two ways that financial market instability may lead to adverse effects on real economic activity. How does Keynes’ view compare to Classical Economists view of financial market instability.
The market structure of an industry is determined by: a. the ownership structure of firms. b....
The market structure of an industry is determined by: a. the ownership structure of firms. b. learning by doing. c. minimum efficient scale relative to industry demand. d. differences in the quality of managers across industries.
What is the oligopoly market structure of the music industry?
What is the oligopoly market structure of the music industry?
Explain the concept of adverse selection. How can that lead to market failure?
Explain the concept of adverse selection. How can that lead to market failure? Using the example of insurance markets, outline some ways in which market failure can be avoided or reduced?
How can regional concentration of firms in an industry lead to external economies of scale? Give...
How can regional concentration of firms in an industry lead to external economies of scale? Give examples of these types of industrial clusters in the United States. Are they always beneficial?
Explain Hyman Minsky’s Financial Instability Hypothesis, using a balance sheet approach. How can stability breed instability,...
Explain Hyman Minsky’s Financial Instability Hypothesis, using a balance sheet approach. How can stability breed instability, according to Minsky?
1) What are the links between industry structure and profitability? 2) How is industry structure utilized...
1) What are the links between industry structure and profitability? 2) How is industry structure utilized for understanding the dynamics of competition? 3) How do you assess (determine) the power of suppliers and buyers? 4) What are the measures of competitive success? 5) How are competitive advantages and the activities in a company’s value chain related? 6) What are the activity choices that reflect the distinct customer segment chosen by each company? 7) What is strategy in terms of activities...
Write (2) page paper on the market structure oligopoly. Identify an industry or market that is...
Write (2) page paper on the market structure oligopoly. Identify an industry or market that is an oligopoly and tell us who the companies are, what products or services they provide and the percentage of their market share.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT