Eco – calculate the rothschild index for each industry

Refer to the figure below:

(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?

Note:TheRothschild index is given by,

R = ET/EF

where ET is the elasticity of demand for the total market and EF is the elasticity of demand for the individual firm’s product.

For perfect competitionRothschild index is 0 and 1 for monopoly so its value lies in between 0 to 1.