Question 49

The four-firm concentration ratio for the companies is 60.

The four-firm concentration ratio, which indicates the total market share held by the four largest firms in an industry, is calculated to be 60. This suggests that the largest four companies collectively hold 60% of the market.

A) 732

Option A is incorrect as a concentration ratio of 732 would imply that the market share exceeds 100%, which is not possible. Concentration ratios are expressed as a percentage of the total market, so values over 100 indicate a misunderstanding of the metric.

B) 452

Option B is also incorrect because a concentration ratio of 452 would similarly imply an impossible total market share. Ratios must remain within the bounds of 0 to 100%, so this option cannot accurately reflect the market concentration.

C) 40

Option C is inaccurate as it suggests that the four largest firms only hold 40% of the market. This would indicate a lower level of concentration than the correct answer, failing to represent the significant market presence of the leading companies.

D) 60

Option D is the correct answer, as it accurately reflects that the top four firms control 60% of the market. This level of concentration indicates a moderate to high market share among the largest companies, aligning with the definition of the four-firm concentration ratio.

Conclusion

The correct answer is 60, as it accurately represents the proportion of market share held by the largest four firms. Options A, B, and C fail to reflect valid concentration ratios, either exceeding the maximum limit or underestimating the market share, making them incorrect in this context.