FOUR-FIRM CONCENTRATION RATIO: The proportion of total output in an industry produced by the four largest...

Transcribed Image Text:

FOUR-FIRM CONCENTRATION RATIO: The proportion of total output in an industry produced by the four largest firms in an industry. The four-firm concentration ratio is commonly used to indicate the degree to which an industry is oligopolistic and the extent of market control held by the four largest firms in the industry. The four-firm concentration ratio is calculated based on the market shares of the largest firms in the industry. A four-firm concentration ratio over 90 (that is, 90 percent of industry output is produced by the four largest firms) is a good indication of oligopoly and that these four firms have significant market control. Concentration Levels Level Ratio High 80% to 100% Medium Low 50% to 80% 0% to 50% Exercise: A. The 4-firm concentration ratio in this industry is (show your work) Firm % of Industry Sales A B C D E 225553 20 20 15 FOUR-FIRM CONCENTRATION RATIO: The proportion of total output in an industry produced by the four largest firms in an industry. The four-firm concentration ratio is commonly used to indicate the degree to which an industry is oligopolistic and the extent of market control held by the four largest firms in the industry. The four-firm concentration ratio is calculated based on the market shares of the largest firms in the industry. A four-firm concentration ratio over 90 (that is, 90 percent of industry output is produced by the four largest firms) is a good indication of oligopoly and that these four firms have significant market control. Concentration Levels Level Ratio High 80% to 100% Medium Low 50% to 80% 0% to 50% Exercise: A. The 4-firm concentration ratio in this industry is (show your work) Firm % of Industry Sales A B C D E 225553 20 20 15