A Four-Firm Concentration Ratio of 75 Tells You That the Top

question 68

Multiple Choice

A four-firm concentration ratio of 75 tells you that the top:

• A) firm in the industry produces 75 percent of the industry's output.
• B) four firms in the industry produce 75 percent of the industry's output.
• C) four firms in the industry produce 25 percent of the industry's output.
• D) four firms in the industry earn 75 percent of the industry's profits.

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Definitions:

High-low Method

A technique in cost accounting used to estimate fixed and variable costs given the highest and lowest levels of activity.

Variable Cost Per Unit

The cost that varies with each unit of product produced, directly tied to the production volume, such as materials and labor.

Fixed Costs

Expenses that remain constant regardless of the level of production or sales, including items like rent, salaries, and insurance.

Contribution Margin Ratio

The percentage of sales revenue that exceeds variable costs, indicating how much sales contribute to fixed costs and profit.