The Industry Elasticity of Demand for Gadgets Is −2,while the Elasticity

question 1

Multiple Choice

The industry elasticity of demand for gadgets is −2,while the elasticity of demand for an individual gadget manufacturer's product is −10.Based on the Rothschild approach to measuring market power,we conclude that:

• A) the Herfindahl index for this industry is 5.
• B) the Herfindahl index for this industry is 0.2.
• C) there is no monopoly power in this industry.
• D) there is significant monopoly power in this industry.

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