A student in a managerial economics class calculated the four-firm concentration ratio and HHI for industries A and B. What is the proper conclusion she can draw from the following findings? Industry AIndustry BFour-firm C0.91HHI3,2002,500
A. C4 is higher for industry A while the HHI is higher for industry B. This inconsistency must be due to a calculation error.
B. Industry B is a monopoly.
C. The market power of firms in industry A is greater than that in industry B.
D. Neither industry is perfectly competitive.
Answer: D
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