If the Two Smallest Firms in a Competitive Market Merged

question 63

Multiple Choice

If the two smallest firms in a competitive market merged, the four-firm concentration ratio _______
Because _______.

• A) would change; the degree of competition is notably diminished
• B) would not change; especially high concentration ratios can benefit consumers
• C) would change; the largest firms high concentration ratio is diminished
• D) would not change; the degree of competition isn't notably diminished

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Definitions:

Revenue

The total income generated by the sale of goods or services related to a company's primary operations before any expenses are deducted.

Realized

Pertains to gains or losses that have been incurred as a result of actual transactions as opposed to those that are theoretical or projected.

Earned

Income or revenue that has been generated or received for goods sold or services provided.

Retained Earnings

The portion of net income that is not distributed to shareholders but is instead reinvested in the business or kept as a reserve for certain purposes.