Which of the following events would increase the four-firm concentration ratio in a milk industry with six firms?
A)The two largest milk producers merge.
B)The largest milk producer buys an ice cream-making plant.
C)The largest milk producer lures customers away from the second largest producer.
D)The four largest milk producers collusively fix prices.

Question

Quizplus · Accepted Answer

In a milk industry with six firms, if the two largest milk producers merge, then the four-firm concentration ratio would increase. The concentration ratio is calculated by adding the market share of the top four or top n firms in the industry. If the two largest firms merge, their combined market share would increase, leading to a higher concentration ratio.

Which of the Following Events Would Increase the Four-Firm Concentration