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

question 76

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

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