Using the information in the table, develop the four-firm concentration ratio. Would you classify this industry as an oligopoly? Explain your answer.

What will be an ideal response?

ANSWER:

The four-firm concentration ratio is 93 percent (800/860 multiplied by 100). This industry would be classified as an oligopoly if we use the rule of thumb that says that an oligopoly exists when the four-firm concentration ratio is at least 75%.