The following are the respective numbers for the four-firm concentration ratio and Herfindahl index in an industry. Which set of numbers would suggest that the industry was monopolistically competitive?
A) 25 and 207
B) 76 and 2662
C) 80 and 1800
D) 89 and 2582

Question

Quizplus · Accepted Answer

Monopolistic competition is characterized by a relatively low concentration ratio and Herfindahl index, indicating many firms with small market shares. Option A has the lowest values, suggesting less concentration and more competition.

The Following Are the Respective Numbers for the Four-Firm Concentration