Which of the Following Is Not a Shortcoming of the Concentration

question 3

Multiple Choice

Which of the following is not a shortcoming of the concentration ratio as a measure of the extent of competition in an industry?

• A)Concentration ratios do not include sales in the United States by foreign firms.
• B)Concentration ratios are calculated for the national market, even though the competition in some industries is mainly local.
• C)Concentration ratios assign weights to only the four largest firms in an industry.
• D)Concentration ratios do not address the fact that competition sometimes exists between firms in different industries.

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Definitions:

Investment Account

A financial account held at a financial institution that holds securities, shares, and other investment assets for the investor.

Equity Method

An accounting technique used to record investments in other companies, where the investment's value is adjusted based on the investor's share of the investee's profits or losses.

Acquisition Combination

The process of uniting two or more entities into one, typically through the purchase of one by another, and integrating their operations.

Consolidated Net Income

The total net income of a parent company and its subsidiaries after intercompany transactions have been eliminated, presented in a single figure.