Concentration Ratios

Concentration Ratios Name ECO 204 April 16, 2012 Teacher Name Have you always wondered how authentic businesses fetch labeled as the top of the key? Or how at that place could be hundreds of satellite line companies, but you only inhabit of two? In this authorship I will talk about oligopolies and monopolies. Also I will compargon tightfistedness ratios and train of competition of primal different industries. To decide if an industry is an oligopoly, their cardinal firmly compactness ratio must be determined. The parsimony ratio indicates the oligopolistic pass on aim of the company and suggests the degree of competition. The four firm niggardness ratios argon calculated by the measure of the function commercialise shares held by the largest firms within that industry. The concentration ratios range from 0-100%. (AmosWEB, 2012) A natural depression direct of concentration is 0-50%. (AmosWEB, 2012) A medium level of concentration ranges from 50%-80%. (AmosWEB, 2012) A high level of concentration ranges from 80%-100%. At a low level of concentration on that point would be a lot of competition, but as the level goes up the less competition there is and the more(prenominal) large businesses are agreeling the market. If the concentration ratio was at 100% it would be extremely oligopolistic and possibly monopolistic.

(AmosWEB, 2012) Oligopoly is a wee group of businesses, needs to be two or more, that run into the market for a certain service or product. (Case, Fair, & adenine; Oster, 2009) Some ex amples of an oligopolistic industry would embroil cell phones , gas, and even cereal. The rationality tha! t cereal is oligopolistic is because there are four major industries that control the market Kellogg, General Mills, Post, and Quaker. in that respect are multiple other cereal brands however those four dominate the market and race would be willing to assume a higher terms for the cereal even though they could by a cheaper brand. A monopoly is where one company controls the lend of goods or services on a certain product. (Case, Fair, & Oster,...If you want to get a full essay, order it on our website: OrderCustomPaper.com

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