If there is a market with the below noted market segmentation, what would the four firm market concentration ratio be? Distribution of sales: 30%, 3%,10%, 5%,15%, 2%, 35%

a. 10
b. 90
c. 50
d. 40

b. 90

Explanation:

The concentration ratio is a term in business that is measured as the total summation of the market share percentage carried by the largest specified number of companies in an industry. The concentration ratio varies between 0% to 100%, and an industry's concentration ratio is considered to demonstrates the extent of competition in the industry.

However, the four-firm concentration ratio is calculated by summing the market shares—that is, the percentage of total sales—of the four largest companies in the given market.

Hence, in this case, we have 35%, 30%, 15% and 10% as the top four largest market share. There by, summation equals => 35+30+15+10 = 90.

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