The automobile industry in Petrovia has a Herfindahl-Hirschman Index of 5,600.This implies that the automobile industry in Petrovia is ________.

Question

Quizplus · Accepted Answer

The Herfindahl-Hirschman Index (HHI) measures the concentration of a market. An HHI of 5,600 indicates a highly concentrated market, meaning that a few firms dominate the industry, and there may be limited competition. Therefore, the correct answer is option C. The other options are incorrect because they refer to different market structures. Option A describes a monopsony market, where there is one buyer, and option B describes an oligopoly, where a few firms dominate the market but not to the extent indicated by the HHI in this question. Option D, perfectly competitive market, is incorrect because a perfectly competitive market has an HHI of zero.

The Automobile Industry in Petrovia Has a Herfindahl-Hirschman Index of 5,600.This