The table above shows the revenue figures for the top four firms along with a total for the remaining firms in the fast-food industry. What is the four-firm concentration ratio for the industry?
A) 80 per cent
B) 200 per cent
C) 20 per cent
D) 100 per cent
E) 25 per cent

Question

Quizplus · Accepted Answer

The four-firm concentration ratio is the percentage of total industry revenue accounted for by the top four firms. In this case, the total revenue for the top four firms (A, B, C, and D) is $320 million. The total revenue for the entire industry, including the top four firms and the remaining firms, is $400 million ($320 million + $80 million). Therefore, the four-firm concentration ratio is $320 million / $400 million, or 80%. However, the question is asking for the concentration ratio for the top four firms only, so we must subtract the revenue of the remaining firms from the total industry revenue. The four-firm concentration ratio is 80% - 20% (the revenue share of the remaining firms), or 60%. Therefore, the answer is C.

The Table Above Shows the Revenue Figures for the Top