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The industry price elasticity of demand for good X is −1.5. The price elasticity of demand for the output of an individu...

The industry price elasticity of demand for good X is −1.5. The price elasticity of demand for the output of an individual firm producing good X in this industry −9. From this we can conclude that:

  • individual firms have significant market power.

  • the HHI for this industry is 1,667.

  • this industry is highly concentrated.

  • None of the options.

  • individual firms have little market power.

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Answer #1

  • individual firms have little market power.

Explanation: Individual firms have very little market power as the demand faced by a firm is much more elastic as compared to the demand faced by the industry.

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