Question

All of the following are measures of market power except the:

A) four-firm concentration ratio for an industry.

B) Herfindahl-Hirschman Index.

C) Minimum-Efficient Scale Index.

D) Lerner Index.

Answer 1

Option C.

• All of the following are the measures of market power except minimum efficient scale index.
• The minimum efficient scale index specifies the lowest or the minimum point of production by a firm which helps it in lowering it's long run average cost.
• It does not play any role in measuring market power.
• All the other indices, four firm concentration ratio, Herfindahl-Hirschman index and Lerner index are the important measure's of market power.