Which of the Following Events Would Increase the Four-Firm Concentration

question 12

Multiple Choice

Which of the following events would increase the four-firm concentration ratio in a milk industry with six firms?

• A)The two largest milk producers merge.
• B)The largest milk producer buys an ice cream-making plant.
• C)The largest milk producer lures customers away from the second largest producer.
• D)The four largest milk producers collusively fix prices.

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Definitions:

Raw Materials Inventory

The total cost of all the materials that are used in making a product that is still in stock and not yet processed.

Direct Materials

Raw materials that are directly traceable to the production of a product and are a part of the final product.

Total Manufacturing Cost

The aggregate sum of all costs directly involved in the production of goods, including raw materials, labor, and manufacturing overhead.

Underapplied Manufacturing Overhead

A scenario in which the designated costs for manufacturing overhead are below the overhead expenses that have been actually incurred.