Assume That the Four-Firm Concentration Ratio in an Industry Is

question 240

Multiple Choice

Assume that the four-firm concentration ratio in an industry is 85 percent.Which of the following statements uses one of the five competitive forces to argue that this industry may be more competitive than its concentration ratio suggests?

• A)The high concentration may be due to patents owned by the largest firms but competition will increase when patent rights expire.
• B)If high concentration is the result of large firms owning much of the available supply of a key input, the industry will become more competitive when new sources of the input are discovered by other firms.
• C)Even though concentration is high, large firms in the industry may act competitively by spending large sums on advertising.
• D)The threat of entry into this industry can cause firms in the industry to lower their prices and profits in order to deter entry.

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Definitions:

Control

Control refers to the power to influence or direct people's behavior or the course of events.

Unconscious

The part of the mind that is inaccessible to the conscious mind but that affects behavior and emotions.

Validity Scales

Measures used in psychological testing to assess the truthfulness or consistency of the test-taker's responses.

MMPI-2

The Minnesota Multiphasic Personality Inventory-2, a comprehensive psychological test that assesses personality traits and psychopathology.