Which of the following four-firm concentration ratios is consistent with monopolistic competition?
A) 100 percent
B) 75 percent
C) 25 percent
D) 0 percent
E) 91 percent

Question

Quizplus · Accepted Answer

A four-firm concentration ratio of 25 percent is consistent with monopolistic competition. In monopolistic competition, firms compete against each other by offering differentiated products, which gives them some market power. As a result, there are many firms in the market with relatively small market shares, so the market is not dominated by a few large firms. This is reflected in a low four-firm concentration ratio.

Which of the Following Four-Firm Concentration Ratios Is Consistent with Monopolistic