When the CR4 of an industry is equal to 30, it signals that the industry is closer to

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BlackTom AI · Accepted Answer

When evaluating the relationship between CR4 and the typical industry structure, it helps to recall what CR4 measures: the cumulative market share of the four largest firms in an industry. A higher CR4 indicates greater concentration and less competition.
Option 1: monopolistic competition. In monopolistic competition, many firms compete with differentiated products, and market concentration is relatively low. A CR4 of 30 is not particularly high for this structure, which typically features low to moderate concentration rather than dominance by a few firms. Therefore this option is plausible as a relatively less-concentrated market rather than a highly concentrated one.
Option 2: oligopoly. An oligopoly is characterized by a small number of large firms that hold substantial market power, leading to a higher CR4. A CR4 of 30 signals a significant share controlled by the top firms, aligning with oligopolistic characteristics where a few players dominate the market.
Option 3: monopoly. In a pure monopoly, the top firm would hold nearly all the market share, making CR4 very close to 100%. A CR4 of 30 is far from monopoly territory, since one firm would dominate almost the entire market, which this figure does not reflect.
Option 4: perfect competition. Perfect competition features a vast number of small firms with negligible individual market shares, yielding a very low CR4, typically far below 10% in many cases. A CR4 of 30 is inconsistent with the highly fragmented nature of perfect competition.
In summary, a CR4 of 30 points to considerable market concentration, which is more characteristic of an oligopoly, while still allowing some competition typical of monopolistic competition depending on product differentiation and other factors. The options that align with higher concentration than perfect competition but not with a single-firm monopoly are monopolistic competition and oligopoly, whereas monopoly and perfect competition are not consistent with a CR4 of 30.

When the CR4 of an industry is equal to 30, it signals that the industry is closer to

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