Respuesta :
A concentration ratio measures the (D) proportion of industry output produced by the largest firms.
What is a concentration ratio?
- Concentration ratios are used in economics to quantify market concentration and are based on a company's market share in a certain industry.
- Market share can be defined as a company's proportion of total sales in industry, its market capitalization as a percentage of total industry market capitalization, or any other statistic that represents a company's size and dominance relative to its competitors.
- A concentration ratio (CR) is the sum of the percentage market shares of (a certain number of) an industry's largest firms.
- An n-firm concentration ratio is a standard metric of market structure that displays the combined market share of the market's n greatest firms.
What does a concentration ratio measure?
- Concentration ratios calculate the percentage of total sales accounted for by the industry's four largest firms.
As is shown above that a concentration ratio calculates the percentage of total sales accounted for by the industry's four largest firms.
Therefore, a concentration ratio measures the (D) proportion of industry output produced by the largest firms.
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Correct answer:
A concentration ratio measures the:
A. Proportion of industry output produced by all firms.
B. Dollar value of total industry output produced by the largest firms.
C. Dollar value of total industry output produced by all firms.
D. Proportion of industry output produced by the largest firms.
E. None of the options are correct.
A concentration ratio measures the Proportion of industry output produced by the largest firms.
In economics, a concentration ratio refers to the ratio of the market shares of a particular company in relation to the entire market size. This ratio also measures the size of a company or firm in comparison to the size of the whole market.
The concentration ratio compares the size of firms in relation to their industry as a whole.
Low concentration ratio indicates greater competition in an industry, compared to one with a ratio nearing 100%, which would be a monopoly.
An oligopoly is apparent when the top five firms in the market account for more than 60% of total market sales, according to the concentration ratio.
Hence, The four-firm concentration ratio is the proportion of total output produced by the four largest firms in the industry and the eight-firm concentration ratio is proportion of total output produced by the eight largest firms in the industry.
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