Concentration ratios:

Question

Quizplus · Accepted Answer

Concentration ratios only consider domestic firms and ignore imported products, which may lead to an understatement of the degree of competition. Additionally, interindustry competition is also not considered, which further limits the accuracy of concentration ratios as a measure of competition. Therefore, option C is the correct choice. Option A is partially correct, but it only covers the impact of imported products, while ignoring interindustry competition. Option B is also partially correct, but again, it only focuses on interindustry competition and ignores imported products. Option D is incorrect because concentration ratios do not provide detailed insights into the price and output behavior of firms, but only indicate the market power of the leading firms in an industry.

Concentration Ratios