The lower the concentration ratio, the
A)more control an individual firm has to set prices.
B)more competitive the industry.
C)less competitive the industry.
D)Both a and c are correct.

Question

Quizplus · Accepted Answer

The concentration ratio measures the market share of the largest firms in an industry. Therefore, a lower concentration ratio indicates that there are more firms with relatively smaller market shares. This suggests that the industry is more competitive, as no single firm has a dominant position to influence prices. Option A is incorrect because a lower concentration ratio implies less control for each individual firm. Option C is incorrect because a lower concentration ratio suggests that the industry is more competitive, not less competitive.

The Lower the Concentration Ratio, the