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The four-firm concentration ratio

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The four-firm concentration ratio
a. indicates the total profitability among the top four firms in an industry.
b. is an indicator of the degree of monopolistic competition.
c. indicates the presence and intensity of an oligopoly market.
d. is used by the government as a basis for anti-trust cases.

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The four-firm concentration ratio

a. indicates the total profitability among the top four firms in an industry.
b. is an indicator of the degree of monopolistic competition. ...

Solution Summary

Answer to a multiple choice question on the four-firm concentration ratio.

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See Also This Related BrainMass Solution

Four-Firm Concentration Ratio

Industry structure is often measured by computing the Four-Firm Concentration Ratio. Suppose you have an industry with 20 firms and the CR is 30%. How would you describe this industry? Suppose the demand for the product rises and pushes up the price for the good. What long-run adjustments would you expect following this change in demand? What does your adjustment process imply about the CR for the industry?

Now consider that the industry has 20 firms but the CR for the industry is 80% instead of 30%. How would you describe this industry? What are some reasons why this industry has a high CR while the other industry had a low CR? Is it possible for smaller firms to thrive and profit in such an industry? How? Contrast the effects on market efficiency if the dominating firms use a price leadership model versus a contestable markets model. Be sure to show your work.

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