Accounting

(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 [removed]
Construction -1.0 -5.2 [removed]
Durable manufacturing -1.4 -3.5 [removed]
Nondurable manufacturing -1.3 -3.4 [removed]
Transportation -1.0 -1.9 [removed]
Communication and utilities -1.2 -1.8 [removed]
Wholesale trade -1.5 -1.6 [removed]
Retail trade -1.2 -1.8 [removed]
Finance -0.1 -5.5 [removed]
Services -1.2 -26.4 [removed]

(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.

Solution:

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