Consider the following characteristics of a particular industry:
- the four- firm concentration ratio is 78 percent (in the relevant market)
- each firm produces output where P MC
- firms advertise their product This industry is likely to be

Question

Consider the following characteristics of a particular industry:
- the four- firm concentration ratio is 78 percent (in the relevant market)
- each firm produces output where P > MC
- firms advertise their product This industry is likely to be

Quizplus · Accepted Answer

The high four-firm concentration ratio indicates that the industry is dominated by a few large firms. Additionally, the fact that firms are able to set prices above marginal cost and engage in advertising suggests that there is limited competition among the firms. Therefore, this industry is likely an oligopoly.

Consider the Following Characteristics of a Particular Industry