What is an important shortcoming of a four-firm concentration ratio as a measure of industry concentration? a. It completely ignores the sales of firms not among the top four firms. b. It fails to account for total industry sales in each reporting time period during the study. c. It cannot distinguish between an industry with a single dominant firm and an industry with four powerful firms. d. The text says, instead, that the ratio has no discernible shortcomings.
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This is indeed a shortcoming. The four-firm concentration ratio only considers the market share of the top four firms in an industry, ignoring the rest of the firms. This could lead to an incomplete or skewed understanding of the industry's concentration. b. This Show more…
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