Other things remaining the same, the concentration ratio in an industry will increase if:
A) new firms enter the industry.
B) some firms leave the industry.
C) the largest firms are broken up into smaller firms.
D) the industry's output increases.

Question

Quizplus · Accepted Answer

If some firms leave the industry, the total output of the industry remains the same but the number of firms decreases. This leads to an increase in the concentration ratio (i.e. the market share of the remaining firms). A, C, and D would all lead to a decrease in the concentration ratio.

Other Things Remaining the Same, the Concentration Ratio in an Industry