Concentration Ratios May Be Inaccurate Indicators of the Degree of Monopoly

question 241

Multiple Choice

Concentration ratios may be inaccurate indicators of the degree of monopoly power in an industry because

• A) they include interindustry competition.
• B) foreign competition is not considered.
• C) they are only calculated for local and regional markets.
• D) they do not distinguish between normal and economic profit.

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Definitions:

Necessary Ingredient

An essential component or element required for a particular process, action, or outcome to occur.

Franchise Agreement

A contract whereby a company (the franchisor) grants permission (a license) to another entity (the franchisee) to use the franchisor’s name, trademark, or copyright in the operation of a business and associated sale of goods in return for payment.

Termination

The act of ending something, such as employment or a contract, often following a specific procedure or due to certain conditions being met.

Uniform Franchise Termination Act

A legal statute that standardizes the process and conditions under which a franchise relationship can be terminated.