Question

When four or fewer firms produce all of an industry's output, the four-firm concentration ratio is ______.

a) Zero
b) One

Answer 1

The four-firm concentration ratio is equal to one when four or fewer firms produce all of an industry's output. This indicates a high level of concentration and raises concerns about competition in the industry.

Step-by-step explanation:

The four-firm concentration ratio is a measure of the combined market share of the largest four firms in an industry. When four or fewer firms produce all of an industry's output, the four-firm concentration ratio is equal to one. This means that the largest four firms in the industry account for 100% of the market share. It indicates a high level of concentration and raises concerns about competition in the industry.