Concentration ratios may understate the degree of competition if they ignore imported products, as these imports can provide significant competition to domestic firms, thereby increasing the overall competitive landscape of the market.

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Concentration Ratios

Question 120

Multiple Choice

Concentration ratios

A) may overstate the degree of competition because they ignore imported products.
B) may overstate the degree of competition because interindustry competition is ignored.
C) may understate the degree of competition because they ignore imported products.
D) provide detailed insights as to the price and output behavior of firms that compose the various industries.

Correct Answer: