Question

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

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

Homework Answers

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.

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