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18 November, 19:42

Suppose an industry has a four-firm concentration ratio of 20 percent and a Herfindahl index of 600. According to the cartel model, the industry would be more likely to have: a. a price war. b. either a monopolistic or a competitive price, depending on barriers to entry and exit. c. a competitive price. d. a monopolistic price.

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  1. 18 November, 20:12
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    a competitive price

    Explanation:

    a competitive price

    A four firm concentration ratio being just 20% shows and it is not mentioning any monopoly. Also a Herfindahl index of 600 is considered low

    therefore a firm in mentioned industry likely to have a competitive price as lot of firms are competing with same market shares.

    competitive price is referred to that tactics where all competitor sells all items at same price.
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