Total industry sales are $100 billion. The four largest firms have sales of $35 billion, $17 billion, $6.8 billion, and $2.2 billion. The industry's approximate four-firm concentration ratio is
A)0.61.
B)0.88.
C)0.39.
D)0.06.

Question

Quizplus · Accepted Answer

The four-firm concentration ratio is calculated by adding the sales of the four largest firms and dividing by the total industry sales, then converting to a percentage. Here, ($35 billion + $17 billion + $6.8 billion + $2.2 billion) / $100 billion = $61 billion / $100 billion = 0.61 or 61%.

Total Industry Sales Are $100 Billion