Interdependence of firms is most common in

The interdependence of firms is most common in Select one: a. monopolistically competitive and oligopolistic industries. b. monopolistic industries. c. oligopolistic industries. Short Answer: Explain why the monopolist has no supply curve? Short Answer: The breakfast cereal industry has a four-firm concentration ratio of 78 percent. Is this enough information to classify the industry as an oligopoly? Is a high concentration ratio evidence that an industry is not competitive?

Answer

Answer (C) – oligopolistic industries.
  • The interdependence of firms is most common in oligopolistic Industries.
  • The interdependence of firms plays a major role in Oligopoly, as it reduces the competition between two teams and increasing their profits.
Monopolist has no supply curve because –
  • Marginal cost curve (short run) shows a unique relationship between price and quantity.
  • The output depends on marginal cost as well as demand curve, therefore any shift in the demand curve is unable to trace the price level.
Concentration Ratio-
  • The concentration is defined as the ratio of size of the firm to the the size of whole industry.
  • The concentration ratio is a deciding factor which determines whether a firm is small or large.
  • When the concentration ratio lie between 0 to 50, the firm or industry is considered as Oligopoly.
Since, the given concentration ratio is 78, therefore it is enough information to classify that the industry is Oligopoly. High concentration ratio –
  • The range of high concentration ratio is 80 to 100.
  • High concentration ratio results in less amount of market power
  • Facing very less competition from foreign and also sometimes behave competitively.

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