Final answer:
The degree of monopoly pricing power increases as the concentration ratio increases in an industry.
Step-by-step explanation:
The concentration ratio is an early tool used to measure the degree of monopoly power in an industry. It measures the market share accounted for by the largest firms in the industry and is typically calculated for the top four to eight firms. As the concentration ratio increases, the degree of monopoly pricing power also increases.
For example, if there are only a few large firms dominating the market and they have high market shares, they may have the ability to influence prices and control the market. This is because they have less competition and more market power.
In contrast, when there is low concentration and more firms in the market, each firm has less market power and prices are typically more competitive.