The Higher the Concentration Ratio, the

question 462

Multiple Choice

The higher the concentration ratio, the

• A)more control an individual firm has to set prices.
• B)more competitive the industry.
• C)less competitive the industry.
• D)Both a and c are correct.

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Definitions:

Direct Expense

Direct expense refers to costs directly incurred in the manufacturing of a product or in providing a service, distinguishable by its direct association with specific business activities.

Indirect Expenses

Costs that are not directly attributable to the production of goods or services, such as administrative and marketing expenses.

Investment Center

A business unit within a company that is responsible for its own revenue, expenses, and investment of capital, often evaluated on its return on investment.

Residual Income

The net income an entity generates above its required rate of return or cost of capital.