Four Firm Concentration Ratio quiz #1 Flashcards
Four Firm Concentration Ratio quiz #1
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Which of the following industries has the highest four-firm concentration ratio? The industry with the highest four-firm concentration ratio is the one where the top four firms account for the largest percentage of total industry output, indicating the greatest market concentration. What is the four-firm concentration ratio in an industry with the following market shares: Firm A - 40%, Firm B - 25%, Firm C - 15%, Firm D - 10%, and other firms - 10%? The four-firm concentration ratio is the sum of the market shares of the top four firms: 40% + 25% + 15% + 10% = 90%. What is the four-firm concentration ratio and how is it calculated? The four-firm concentration ratio is calculated by dividing the combined output of the four largest firms in an industry by the total industry output. It measures the degree of market concentration and is expressed as a percentage. What is the first step in calculating the four-firm concentration ratio for an industry? The first step is to find the total industry output by adding up the output of all firms in the industry. How do you identify which firms to include when calculating the four-firm concentration ratio? You select the four firms with the largest output in the industry, regardless of their names or other characteristics. If the four largest firms in an industry produce 970 units and the total industry output is 1161 units, what is the four-firm concentration ratio as a percentage? The ratio is (970/1161) × 100 = 83.5%. What does a high four-firm concentration ratio indicate about an industry? A high ratio suggests that a few large firms dominate the industry and produce most of the output, indicating high market concentration. Why is it important to use the four-firm concentration ratio when analyzing market power? It helps determine how much control the largest firms have over the market, which can affect competition and pricing. In the saxophone solos example, which four musicians were identified as the largest producers? John Coltrane, Bradford Marsalis, Cannonball Adderley, and Charlie Parker were the four largest producers. What does the four-firm concentration ratio not tell you about an industry? It does not provide information about the distribution of output among the remaining firms or the competitive dynamics beyond the top four.