Suppose that an industry consists of 10 firms, and the top 4 firms have annual sales of $2.5 million, $2 million, $1.5 million, and $1 million, respectively. If the entire industry has annual sales of $10 million, the four-firm concentration ratio is
A) 85 percent.
B) 50 percent.
C) 10 percent.
D) 70 percent.

Question

Quizplus · Accepted Answer

The four-firm concentration ratio is calculated by adding the sales of the top 4 firms and dividing by the total sales of the industry. Here, ($2.5m + $2m + $1.5m + $1m) / $10m = $7m / $10m = 70%.

Suppose That an Industry Consists of 10 Firms, and the Top