Suppose That the Sales of the Six Largest Firms in an Industry

question 204

Multiple Choice

Suppose that the sales of the six largest firms in an industry are 90,000, 85,000, 80,000, 75,000, 70,000, and 65,000 units, respectively.If the industry's total sales are 1 million units, the four-firm concentration ratio is:

• A) 82.5 percent.
• B) 71 percent.
• C) 66.7 percent.
• D) 33 percent.

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Definitions:

APC (Average Propensity to Consume)

The fraction of income that is spent on consumption as opposed to savings.

Disposable Income

The amount of money available to households for making purchases and savings after the removal of income taxes.

Saving

The act of setting aside a portion of current income for future use, or the portion of income not spent on current expenditures.

MPC (Marginal Propensity to Consume)

The proportion of additional income that is spent on consumption.