Question

Suppose that there are six firms that produce good A Their revenue are: Firm 1: $15,000...

Suppose that there are six firms that produce good A

Their revenue are:

Firm 1: $15,000

Firm 2: $20,000

Firm 3: $15,000

Firm 4: $12,500

Firm 5: $37,500

Firm 6: $15,000

Calculate the 4 firm concentration ratio (enter as a decimal

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Homework Answers

Answer #1

4 firm concentration ratio is the ratio of the total sales of 4 largest firms in the industry to the total sales of the industry.

Total sales = 15000 + 20000 + 15000 + 12500 + 37500 + 15000 = 115000

Sales of 4 largest firm = 37500 + 20000 + 15000 + 15000 = 87500

Calculate the Four-firm concentration ratio -

Four-firm concentration ratio = Sales of 4 largest firms/Total sales of industry = 87,500/115,000 = 0.76

Thus,

The four-firm concentration ratio is 0.76

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