Which of the following is true about coal producers, particularly given that the Herfindahl Index of...
Which of the following is true about coal producers, particularly given that the Herfindahl Index of their industry is 0.08?
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The firms have a lot of market power. |
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The demand for coal is inelastic. |
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New entrants face large barriers to entry. |
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Coal producers take the price of coal as given. |
Homework Answers
Since HHI is 0.08 which is relatively low reflecting that the industry is competitive and the competitive industry have low barriers to entry, firm have low market power, elastic demand and firms are price taker Hence, "coal producers take the price of coal as given" is correct option
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