Question

Which is not a feature of the four‑firm concentration ratio? a) It is an indicator of the oligopolistic nature of an industry. b) It only considers firms producing the same product. c) It only considers goods produced in the United States. d) The ratio considers differences between the market shares of the top four firms.

Answer 1

Answer: d) The ratio considers differences between the market shares of the top four firms. It is NOT a feature of the four-firm concentration ratio.

Explanation:

The concentration index of a market is the market percentage of a number of companies in that market with respect to its total size. It is used to calculate the domain of one or more companies in their respective market. It is used to calculate the domain of one or more companies in their respective market. Therefore the concentration ratio of 4 companies calculates the total market percentage of these 4 companies and presents with respect to the total market, so it does not take into account the differences between the market shares of the four main companies.