Author Question: The above table shows the percent of sales held by the four largest firms in an industry. a) ... (Read 86 times)

luminitza

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The above table shows the percent of sales held by the four largest firms in an industry.
 
  a) Calculate this industry's four-firm concentration ratio.
  b) Is this industry competitive?
  c) What market type does it most likely represent?

Question 2

In the market for automobile insurance, adverse selection implies that
 
  A) those who are insured might take greater risks.
  B) those who are uninsured might take greater risks.
  C) insured and uninsured alike will take greater risks.
  D) drivers with greater risks are more likely to buy insurance.



gcook

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Answer to Question 1

a) The four-firm concentration rate is 30 percent.
b) Because the four-firm concentration ratio is relatively low, the industry is competitive.
c) The industry is most likely monopolistic competition.

Answer to Question 2

D



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