A high Four-Firm Concentration Ratio (CR4), such as 80%, indicates:

Question

BlackTom AI · Accepted Answer

Consider the concept of the Four-Firm Concentration Ratio (CR4), which measures the combined market share of the four largest firms in an industry. A high CR4 signals that a large portion of total industry sales is captured by a small number of firms, indicating concentrated market structure.
Option 1: 'A tight oligopoly where a few firms dominate the market' aligns with the idea of high concentration. If the four biggest firms account for most sales, market power tends to be held by those few players, characteristic of an oligopolistic setup.
Option 2: 'A fragmented industry with many equal-sized firms' would correspond to a low CR4, since no small group of firms controls a large share of total sales; this contradicts a high CR4 like 80%.
Option 3: 'An industry with limited pricing power' is not consistent with high concentration. In an environment where a few firms dominate, those firms typically enjoy greater pricing power due to reduced competitive pressure, so the claim of limited pricing power is unlikely.
Option 4: 'A perfectly competitive market' implies many firms with no single firm able to influence price, resulting in a very low CR4. A CR4 of 80% is incompatible with perfect competition and indicates much greater market influence by the top players.
In summary, the high CR4 signals that only a few firms hold most of the market, supporting the oligopoly interpretation and contradicting fragmentation, broad pricing constraints, or perfect competition.

A high Four-Firm Concentration Ratio (CR4), such as 80%, indicates:单项选择题

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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.

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