NISM Certifications · NISM-Series-XV: Research Analyst · Industry Analysis
An industry's four largest firms have market shares of 30%, 25%, 15% and 10%. What is the four-firm concentration ratio, and what does it broadly indicate?
The concentration ratio is 80%, from adding 30, 25, 15 and 10. Such a high share held by four firms indicates a highly concentrated, oligopolistic industry, not perfect competition or a fragmented market.
- A80%, a highly concentrated (oligopolistic) industryCorrect
- B80%, a perfectly competitive industry
- C55%, a highly fragmented industry
- D20%, a monopoly
Explanation
The four-firm concentration ratio is the sum of the top four shares: 30+25+15+10 = 80%. A figure this high indicates a concentrated, oligopolistic structure, not perfect competition. Options with 55% or 20% use wrong sums.
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