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:

Unsold Units

Items that have been produced or acquired for sale but have not yet been sold during a specific period.

Ore Mined

The raw material extracted from the earth that contains valuable minerals or metals to be processed and utilized.

Patent Amortization

The gradual write-off of the cost of a patent over its useful life to reflect its consumption, expiration, or decline in value.

Franchise Acquisition

The process of acquiring the rights to operate a business under an established company's brand and system.