Which of the following indicators suggest(s) a monopoly market? | Chartered Financial Analyst Level 1 Quiz - LeetQuiz
Chartered Financial Analyst Level 1
Explanation:
Explanation:
Option A is correct because a concentration ratio of 100% indicates that a single firm controls the entire market, which is characteristic of a monopoly. The concentration ratio measures the combined market share of the largest firms, ranging from 0% (perfect competition) to 100% (monopoly).
Option B is incorrect because a Herfindahl-Hirschman index (HHI) of zero implies perfect competition, not a monopoly. The HHI is calculated by squaring the market shares of all firms and summing them. In a monopoly, the HHI would be 1 (or 10,000 if expressed as a percentage).
Option C is incorrect because a monopoly is indicated by a concentration ratio of 100%, not an HHI of zero. The HHI of zero contradicts the definition of a monopoly.
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Which of the following indicators suggest(s) a monopoly market?
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A
A concentration ratio of 100% exclusively.
100.0%
B
A Herfindahl-Hirschman index (HHI) of zero exclusively.
0.0%
C
Both a concentration ratio of 100% and a Herfindahl-Hirschman index (HHI) of zero.