Asked by Tarun Rajpurohit on May 04, 2024
Verified
As a general rule,oligopoly exists when the four-firm concentration ratio:
A) exceeds the Herfindahl index.
B) is less than the Herfindahl index.
C) is 40 percent or more.
D) is 15 percent or more.
Oligopoly
A market structure in which a few firms dominate, and each one can significantly affect prices and other market factors.
Four-firm Concentration Ratio
An indicator of the extent to which the four largest firms dominate an industry, measured by their combined market share.
Herfindahl Index
A measure of market concentration, calculated by summing the squares of the market shares of all firms in the market.
- Comprehend the function of concentration ratios and the Herfindahl index in evaluating market concentration.
Verified Answer
CJ
Cristal JosephMay 07, 2024
Final Answer :
C
Explanation :
The four-firm concentration ratio measures the total market share of the four largest firms in an industry. A common benchmark for identifying an oligopoly is when this ratio is 40 percent or more, indicating that the market is dominated by a few large firms.
Learning Objectives
- Comprehend the function of concentration ratios and the Herfindahl index in evaluating market concentration.