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Author Question: The four largest firms in an industry account for the following value of industry sales: 12 percent, ... (Read 123 times)

awywial

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on: Jun 29, 2018
The four largest firms in an industry account for the following value of industry sales: 12 percent, 8 percent, 5 percent and 4 percent. Calculate the four-firm concentration ratio. Would this industry be regarded as competitive or concentrated?
 
  What will be an ideal response?

Question 2

If a lender checks credit reports on individuals before mailing out loan offers, it is most likely trying to avoid
 
  A) moral hazard.
  B) moral dilemma.
  C) adverse selection.
  D) adverse reaction.


rnehls

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Reply #1 on: Jun 29, 2018
Answer to Question 1

The four-firm concentration ratio is 29 percent. The four-firm concentration ratio is less than 40 percent, so the industry would be regarded as competitive.

Answer to Question 2

C


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