Suppose the 2- Firm Concentration Ratio (Measuring Output)in a Canadian

question 101

Multiple Choice

Suppose the 2- firm concentration ratio (measuring output) in a Canadian manufacturing industry is over 90%.Why might the market power of these 2 firms be less than the concentration ratio suggests?

• A)A high concentration ratio usually indicates low degrees of market power.
• B)A 2- firm concentration ratio does not provide enough information.
• C)The product is purely domestic and there is no international trade.
• D)The product is traded internationally and the two Canadian firms compete with many global rivals.
• E)The relevant market is regional and so the concentration ratio is not relevant.

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