One of the reasons that concentration ratios are not a perfect measure of competitiveness is that they
A) cannot be measured.
B) tell nothing about how high prices were in the past.
C) ignore potential competition.
D) do not measure how high the industry's prices are.

Question

Quizplus · Accepted Answer

Concentration ratios, which measure the market share of the largest firms in an industry, do not account for potential competition from new entrants or from firms outside the market that could easily enter if they saw an opportunity. This limitation means they might not fully capture the competitive dynamics of an industry.

One of the Reasons That Concentration Ratios Are Not a Perfect