The four-firm concentration ratio in an industry is 75 percent. Total sales in the industry are $800 million and total economic profit in the industry is $500 million.Normal profit for each firm is zero.
From this information we know that
A)economic profit of any four firms is at least $667 million.
B)total sales from the four largest firms is $600 million.
C)economic profit of the four largest firms is $375 million.
D)total sales from any four firms is at least $1,067 million.
E)economic profit of the four largest firms is $500 million.

Question

Quizplus · Accepted Answer

The four-firm concentration ratio of 75 percent means that the four largest firms in the industry account for 75% of total sales. Given that total sales in the industry are $800 million, 75% of this amount is $600 million, which is the total sales from the four largest firms.

The Four-Firm Concentration Ratio in an Industry Is 75 Percent