question archive Industries X and Y both have four-firm concentration ratios of 65%, but the Herfindahl index for X is 1,500 while that for Y is 2,000
Industries X and Y both have four-firm concentration ratios of 65%, but the Herfindahl index for X is 1,500 while that for Y is 2,000
Subject:MarketingPrice:2.88 Bought3
Industries X and Y both have four-firm concentration ratios of 65%, but the Herfindahl index for X is 1,500 while that for Y is 2,000. These data suggest:
a. greater market power in X than in Y.
b. greater market power in Y than in X.
c. that X is more technologically progressive than Y.
d. that price competition is stronger in Y than in X.
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The correct option is b. greater market power in Y than in X.
Industries X and Y are firms dominating the industry having a 65% concentration ratio. However; using the Herfindahl Index Industry Y is dominated in the industry having a higher Herfindahl Index that measures the market share and degree of competition in the market.
