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ECO - Calculate the Rothschild index for each industry




Question;Refer to the figure below:(a) Use the estimated elasticities to calculate the Rothschild index for each industry.Instruction: Round your answers to 3 decimal places.;Industry;Own Price Elasticity of Market Demand;Own Price Elasticity of Demand for Representative Firm's Product;Rothschild index;Agriculture;-1.8;-96.2;Construction;-1.0;-5.2;Durable manufacturing;-1.4;-3.5;Nondurable manufacturing;-1.3;-3.4;Transportation;-1.0;-1.9;Communication and utilities;-1.2;-1.8;Wholesale trade;-1.5;-1.6;Retail trade;-1.2;-1.8;Finance;-0.1;-5.5;Services;-1.2;-26.4;(b) Based on these calculations, which industry most closely resembles perfect competition?;Transportation.;Wholesale trade.;Finance.;Retail trade.(c) Which industry most closely resembles monopoly?;Wholesale trade.;Retail trade.;Finance.;Transportation.Note: TheRothschild index is given by;R = ET/EF;where ET is the elasticity of demand for the total market and EF is the elasticity of demand for the individual firm?s product.;For perfect competitionRothschild index is 0 and 1 for monopoly so its value lies in between 0 to 1.


Paper#57573 | Written in 18-Jul-2015

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