Question

The higher the concentration ratio is in an industry, the more likely it is that a. the market share of the smallest four firms is larger.b. the market share of the largest four firms is smaller.c. the industry has an oligopoly.d. the industry is perfectly competitive.

Answer 1

Answer:

The correct answer is option c.  

Explanation:

The concentration ratio is an indicator of whether the market is comprised of a few large firms or a few small firms.  

A lower concentration ratio means that there is greater competition in the market.

A concentration ratio of up to 50% indicates that the market is perfectly competitive.  

The higher concentration ratio shows that the market is dominated by a few firms. So, a higher concentration ratio means that the market or industry is an oligopoly.