ECONOMICS
MARKET FAILURES
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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if the ten top producers together supply more than 70 percent of the total output.
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if the four top producers together supply more than 60 percent of the total output.
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if the top producer alone supplies more than 50 percent of the total output.
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if the two top producers together supply more than 90 percent of the total output.
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Detailed explanation-1: -A rule of thumb is that an oligopoly exists when the top five firms in the market account for more than 60% of total market sales. If the concentration ratio of one company is equal to 100%, this indicates that the industry is a monopoly.
Detailed explanation-2: -A monopoly is a market with only one producer, a duopoly has two firms, and an oligopoly consists of two or more firms. There is no precise upper limit to the number of firms in an oligopoly, but the number must be low enough that the actions of one firm significantly influence the others.
Detailed explanation-3: -Oligopoly markets are markets dominated by a small number of suppliers. They can be found in all countries and across a broad range of sectors. Some oligopoly markets are competitive, while others are significantly less so, or can at least appear that way.
Detailed explanation-4: -The four-firm concentration ratio The range of concentration ratio is from almost zero for perfect competition to 100 percent for monopoly. A ratio that exceeds 40 percent: indication of oligopoly. A ratio of less than 40 percent: indication of monopolistic competition.
Detailed explanation-5: -Firms are interdependent. Product differentiation. High barriers to entry. Uncertainty.