Suppose an industry has total sales of $25 million per year. The two largest firms have sales of $6 million each, the third largest firm has sales of $2 million, and the fourth largest firm has sales of $1 million. The four-firm concentration ratio for this industry is

Question

Quizplus · Accepted Answer

The four-firm concentration ratio is calculated by adding up the sales of the four largest firms in the industry and dividing by the total industry sales.

In this case, the four largest firms have sales of $6 million + $6 million + $2 million + $1 million = $15 million. 
So the four-firm concentration ratio is:

$15 million / $25 million = 0.6 or 60 percent.

Therefore, the best choice is B.

Suppose an Industry Has Total Sales of $25 Million Per