Consider an industry that is made up of nine firms, each with a market share (per cent of sales)as follows:
a.Firm A: 30%
b.Firm B: 20%
c.Firms C, D and E: 10% each
d.Firms F, G, H and J: 5% each
What is the value of the four-firm concentration ratio and how is the industry categorised?
A)50%; monopolistic competition
B)70%; oligopoly
C)75%; oligopoly
D)80%; strongly oligopolistic

Question

Consider an industry that is made up of nine firms, each with a market share (per cent of sales)as follows: 
a.Firm A: 30%
b.Firm B: 20%
c.Firms C, D and E: 10% each
d.Firms F, G, H and J: 5% each
What is the value of the four-firm concentration ratio and how is the industry categorised?
A)50%; monopolistic competition
B)70%; oligopoly
C)75%; oligopoly
D)80%; strongly oligopolistic

Quizplus · Accepted Answer

The four-firm concentration ratio adds the market shares of the top four firms. Here, that's 30% (Firm A) + 20% (Firm B) + 10% (Firm C) + 10% (Firm D) = 70%. A concentration ratio of 70% indicates that the industry is dominated by a few firms, classifying it as an oligopoly.

Consider an Industry That Is Made Up of Nine Firms