The Results of Many Empirical Studies of Short-Run Cost Functions

question 40

Multiple Choice

The results of many empirical studies of short-run cost functions have shown that total costs conform to

• A)a quadratic total cost function.
• B)a power cost function.
• C)a linear cost function.
• D)a cubic cost function.

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Definitions:

Herfindahl Index

An index reflecting the scale of companies compared to the entire sector and a sign of the level of competitive activity present.

Pure Monopolist

A market structure where a single firm is the sole producer and seller of a product or service without close substitutes, giving it significant market power.

Market Shares

The percentage of an industry's total sales that is earned by a particular company over a specified time period, indicating the company's size or presence in the market.

Interindustry Competition

The competitive relationship between firms or industries producing different goods or services that, while not direct substitutes, compete for the same consumer dollars.