Chapter 10: Competition among the Few

Question 1

Market power:

Answer 1

Market power signifies the degree of control that a single firm or a small number of firms has over the price and production decisions in an industry.

Question 2

Four-firm concentration ratio:

Answer 2

Four-firm concentration ratio is defined as the percent of total industry output that is accounted for by the largest four firms.

Question 3

Eight-firm concentration ratio:

Answer 3

Eight-firm concentration ratio is defined as the percent of total industry output that is accounted for by the largest eight firms.

Question 4

Collusion:

Answer 4

When firms in an oligopoly actively cooperate with each other, they engage in collusion.