-Use the above table. If firms 3 and 4 merge, the four-firm concentration ratio will
A) increase from 75 percent to 80 percent.
B) increase from 60 percent to 75 percent.
C) decrease from 75 percent to 60 percent.
D) not change.

Question

-Use the above table. If firms 3 and 4 merge, the four-firm concentration ratio will
A) increase from 75 percent to 80 percent. 
B) increase from 60 percent to 75 percent. 
C) decrease from 75 percent to 60 percent. 
D) not change.

Quizplus · Accepted Answer

The four-firm concentration ratio measures the total market share of the top four firms in an industry. If firms 3 and 4 merge, their combined market share would increase, leading to a higher concentration ratio. This suggests that the market is becoming less competitive, as a larger portion of the market is controlled by the top firms.

-Use the Above Table