Which of the following statements is true?
A) The higher the market concentration, the lower the price in the market.
B) An increase in market concentration will lead to an increase in prices and profits.
C) A decrease in market concentration will lead to a decrease in efficiency.
D) Market concentration and profits are independent of each other.
E) The larger the concentration ratio, the higher the number of firms in the market.

Question

Quizplus · Accepted Answer

An increase in market concentration, measured by the concentration ratio, leads to less intense competition and more market power for the dominant firms. This can result in higher prices and profits for those firms.

Which of the Following Statements Is True