If the Four-Firm Concentration Ratio in an Oligopolistic Six-Firm Industry

question 76

Multiple Choice

If the four-firm concentration ratio in an oligopolistic six-firm industry is 66.7 percent, and each firm has an equal percentage of sales, the Herfindahl index is

• A)6,667.
• B)1,668.
• C)400.
• D)2,000.

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Definitions:

Economic Order Quantity

An inventory management formula that calculates the ideal order quantity a company should purchase for its inventory with the aim of minimizing costs.

Restocking Quantity

The quantity of inventory ordered to replenish stock levels to a predetermined amount.

Inventory Costs

The costs associated with storing, managing, and financing a company's inventory, including such things as warehousing and insurance.

Shortage Cost

Costs incurred when demand exceeds supply, including opportunity costs of not meeting customer demand and potential loss of sales.