Questions
Single choice
Which of the following statements is NOT correct?
Options
A.The larger the Herfindahl index, the greater the degree of market power in an industry.
B.If an industry evolves from monopolistic competition to oligopoly, we would expect the four-firm concentration ratio to increase.
C.One major problem with concentration ratios is that they fail to take into account the localized market for products.
D.An industry producing a homogeneous product whose four-firm concentration ratio is 76 percent is an example of monopolistic competition.
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Step-by-Step Analysis
To assess which statement is NOT correct, I’ll evaluate each option on its own merits and relate it to standard concepts in industrial organization.
Option 1: 'The larger the Herfindahl index, the greater the degree of market power in an industry.' This is generally true. The Herfindahl-Hirschman Index (HHI) sums squared market shares; higher values indicate greater concentration and typically more market power for the firms in t......Login to view full explanationLog in for full answers
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Similar Questions
8. The Herfindahl index is: A. the sum of the squared percentage market shares of all firms in the industry. B. the sum of the market shares for the top 10 firms in the industry. C. a measure of product differentiation in the market. D. a measure of how easy it is for new firms to enter the market.
A high Four-Firm Concentration Ratio (CR4), such as 80%, indicates:
Part 1'The commercial banking industry in Canada is less competitive than the commercial banking industry in the United States because in Canada only a few large banks dominate the industry, while in the United States there are around 6,500 commercial banks.' Is this statement true or false? Explain your answer.Part 2 A. True. The reason for the large number of US banks is regulations that promote competition such as branching restrictions B. False. The reason for the large number of US banks is anticompetitive regulations such as branching restrictions C. True. The banking industry is less competitive in Canada than in the United States because Canada has a national banking system, i.e., owned and operated by the government D. False. It is not true that the industry is dominated by a few large firms; thus, based on the Herfindahl-Hirschman Index, the banking industry in Canada is just as competitive as in the United States
Which of the following industries has the highest concentration ratio?
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