Consider the following characteristics of a particular industry: - the four-firm concentration ratio is 78% (in the relevant market)
- each firm produces output where P MC
- the products are highly differentiated
This industry is likely to be

Question

Consider the following characteristics of a particular industry: - the four-firm concentration ratio is 78% (in the relevant market)
- each firm produces output where P > MC
- the products are highly differentiated
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, which is a common characteristic of an oligopoly. Additionally, the fact that each firm produces output where P > MC suggests that firms have some degree of market power and are able to set prices above their marginal costs. The highly differentiated products also suggest that firms are not in a perfectly competitive market. Therefore, the best choice is option A) an oligopoly.

Consider the Following Characteristics of a Particular Industry: - the Four-Firm