Asked by Emily Ratliff on Jul 03, 2024
Verified
One major problem with four-firm concentration ratios is that they fail to take into account
A) the localized market for products.
B) excess capacity in production.
C) price leadership.
D) mutual interdependence.
Four-Firm Concentration Ratios
A measure that assesses the total market share of the four largest firms within an industry, indicating the extent of market concentration.
Mutual Interdependence
A condition in which the actions or decisions of each firm in a market affect and are affected by those of other firms, particularly relevant in oligopolistic markets.
Localized Market
A market confined to a specific geographic area, where the products or services offered are tailored to the preferences of the local population.
- Comprehend the importance of concentration ratios in analyzing market structure and the degree of competition.
Verified Answer
ZK
Zybrea KnightJul 06, 2024
Final Answer :
A
Explanation :
Four-firm concentration ratios do not account for the localized market for products, as they typically measure the concentration of market share among the top firms on a broader scale, often ignoring regional market dynamics and competition.
Learning Objectives
- Comprehend the importance of concentration ratios in analyzing market structure and the degree of competition.