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Which of the following terms can determine the percentage of total industry output accounted for by (for example) the four largest firms in the industry? A) Employment rate
Which of the following terms can determine the percentage of total industry output accounted for by (for example) the four largest firms in the industry?
A) Employment rate.
B) Market number.
C) Sales index.
D) Concentration ratio.
Expert Solution
(Answer D)
Concentration ratio is the measure of the size of the firms in relation to whole industry.
The low concentration ratio means that there is higher competition in the industry whereas the concentration ratio equal to 100% means that the industry is characterized by a monopoly.
The 4 firm concentration ratio, consists of the market share of the four bigger firms in an industry, expressed as a percentage is the commonly used concentration ratio in economics field.
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