-In Exhibit L-4, the four-firm concentration ratio for lemonade stands in Econcity is
A) 1.0
B) 0.87
C) 0.66
D) 250
E) 300

Question

-In Exhibit L-4, the four-firm concentration ratio for lemonade stands in Econcity is
A) 1.0 
B) 0.87 
C) 0.66 
D) 250 
E) 300

Quizplus · Accepted Answer

The four-firm concentration ratio is calculated by adding the market shares of the four largest firms in the industry. If the ratio is 0.87 (or 87%), it means these four firms control 87% of the market, indicating a high level of market concentration.

-In Exhibit L-4, the Four-Firm Concentration Ratio for Lemonade Stands