The Four-Firm Concentration Ratio

question 23

Multiple Choice

The four-firm concentration ratio

• A)indicates the total profitability among the top four firms in an industry.
• B)is an indicator of the degree of monopolistic competition.
• C)indicates the presence and intensity of an oligopoly market.
• D)is used by the government as a basis for anti-trust cases.

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Definitions:

Fixed Costs

Costs that do not vary with the volume of production or level of activity within a certain range. These are expenses that must be paid regardless of business activity, such as rent or salaries.

Required Return

The minimum expected yield by investors as compensation for the level of risk associated with an investment.

Initial Investment

The amount of money used to start a project, business, or investment.

Cash Break-even Point

The point at which a business generates enough cash flow to cover its operating expenses, without generating a profit or loss.