Question

Table 16-2
The following table shows the total output produced by the top six firms as well as the total industry output for each industry.

Firm	Industry J	Industry K	Industry L	Industry M
1	14,288	7,878	1,554	22,987
2	12,128	7,242	1,486	21,444
3	11,192	5,321	1,294	18,787
4	3,245	4,900	1,287	16,454
5	2,442	4,526	911	12,890
6	1,004	3,800	745	10,045
Total	55,050	70,250	7,340	198,400

Refer to Table 16-2. Which industry is the least competitive?

A) Industry J

B) Industry K

C) Industry L

D) Industry M

Answer 1

Concentration ratio for Industry J = [(14288 +12128 + 11192 + 3245)/ 55050] 100 = 74.2%

Concentration ration for industry K = [(7878 +7242 +5321+4900)/ 70250]100= 36.07%

Concentration ratio for industry L = [(1554 +1486 +1294+1287)/ 7340]100= 76.58%

Concentration ratio for industry M =[(22987 +21444+18787+16454)/198400]100 = 40.15%

The higher the concentration ratio, the less competitive the industry is .

Therefore, Industry L is the least competitive industry. Hence, option(C) is correct.