Suppose ABC Concrete is the dominant firm in a market consisting of five firms.ABC's market share is 40% of the market.The elasticity of market demand is 0.8 and the elasticity of supply for the remaining firms is 6.What is the elasticity of demand for ABC's product?

Question

Quizplus · Accepted Answer

The elasticity of demand for the dominant firm's product can be calculated using the formula: Ed = Em / (1 - s) + (s * Es), where Ed is the elasticity of demand for the dominant firm, Em is the market demand elasticity, s is the market share of the dominant firm, and Es is the elasticity of supply for the remaining firms. Plugging in the values: Ed = 0.8 / (1 - 0.4) + (0.4 * 6) = 11.

Suppose ABC Concrete Is the Dominant Firm in a Market