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
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.
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