MICROECONOMICS
11th Edition
ISBN: 9781266686764
Author: Colander
Publisher: MCG
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Question
Chapter 15, Problem 8QE
To determine
Find the highly concentrated industry.
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Suppose that the most popular car dealer in your area sells 10 percent of all vehicles. If all other car dealers sell either the same number of vehicles or fewer, what is the largest value that the Herfindahl index could possibly take for car dealers in your area? In that same situation, what would the four-firm concentration ratio be?
Suppose that the top six firms in an industry have total annual sales of $250 billion, $210 billion, $150 billion, $120 billion, $80 billion,
and $60 billion, respectively.
Instructions: Round your answers to the nearest whole number.
a. What is the four-firm concentration ratio for this industry?
percent
b. What is the Herfindahl index for this industry? (Hint: To find the Herfindahl index, you will need to compute the percentage market
share for each firm in the industry. When calculating market share, do not round your intermediate calculations.)
The Costa Rican gimble industry consists of 14 firms whose annual sales are as shown in the table below: \table[[Firm,
Sales (in millions)], [A, 4], [B, 8], [C, 12], [D, 18], [E, 23], [F, 17], [Next eight firms (total), 18]] a. What is the (four-) firm
concentration ratio for this industry? Four firm concentration: % b. In what type of market does the gimble industry
operate? Market type:
c
The Costa Rican gimble industry consists of 14 firms whose annual sales are as shown in the table below:
Firm
A
Sales (in millions)
4
B
C
D
E
F
Next eight firms (total)
8
12
18
23
17
18
a. What is the (four-) firm concentration ratio for this industry?
Four firm concentration:
%
b. In what type of market does the gimble industry operate?
Market type: (Click to select)
v
Chapter 15 Solutions
MICROECONOMICS
Ch. 15.1 - Prob. 1QCh. 15.1 - Prob. 2QCh. 15.1 - Prob. 3QCh. 15.1 - Prob. 4QCh. 15.1 - Prob. 5QCh. 15.1 - Prob. 6QCh. 15.1 - Prob. 7QCh. 15.1 - Prob. 8QCh. 15.1 - Prob. 9QCh. 15.1 - Prob. 10Q
Ch. 15 - Prob. 1QECh. 15 - Prob. 2QECh. 15 - Prob. 3QECh. 15 - Prob. 4QECh. 15 - Prob. 5QECh. 15 - Prob. 6QECh. 15 - Prob. 7QECh. 15 - Prob. 8QECh. 15 - Prob. 9QECh. 15 - Prob. 10QECh. 15 - Prob. 11QECh. 15 - Prob. 12QECh. 15 - Prob. 13QECh. 15 - Prob. 14QECh. 15 - Prob. 15QECh. 15 - Prob. 16QECh. 15 - Prob. 17QECh. 15 - Prob. 18QECh. 15 - Prob. 1QAPCh. 15 - Prob. 2QAPCh. 15 - Prob. 3QAPCh. 15 - Prob. 4QAPCh. 15 - Prob. 5QAPCh. 15 - Prob. 1IPCh. 15 - Prob. 2IPCh. 15 - Prob. 3IPCh. 15 - Prob. 4IPCh. 15 - Prob. 5IPCh. 15 - Prob. 6IPCh. 15 - Prob. 7IP
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- Suppose that the most popular car dealer in your area sells 25 percent of all vehicles. Instructions: Enter your answers as a whole number. a. If all other car dealers sell either the same number of vehicles or fewer, what is the largest value that the Herfindahl index could possibly take for car dealers in your area? b. In that same situation, what would the four-firm concentration ratio be? percentarrow_forwardSuppose that a small town has six burger shops whose respective shares of the local market are (as percentages of all hamburgers sold): 26%, 20%, 18%, 14%, 12%, 10%, What is the four-firm concentration ratio of the hamburger industry and what is the Hirchmann Herfindahl Index (HHI) for the hamburger industry in this town?arrow_forwardSuppose an industry is composed of six firms. Four firms have sales of $10 each, and two firms have sales of $5 each. What is the four-firm concentration ratio for this industry?arrow_forward
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- Suppose that the most popular car dealer in your area sells 2.50 percent of all vehicles. Instructions: Enter your answers as whole numbers. a. If all other car dealers sell either the same number of vehicles or fewer, what is the largest value that the Herfindahl index could possibly take for car dealers in your area? b. In that same situation, what would the four-firm concentration ratio be? 8%arrow_forwardCalculate the four-firm concentration ratio (CR-4) given the sales data. Assume that the firms listed are the only firms in this market. Sales (millions of dollars) 7.4 7.1 Expressive 6.8 LA & Company 6.2 5.3 Forever 22 Limitless 4.2 What is the four-firm concentration ratio? Round to the nearest whole percent in your calculations. Retailer Dap American Jaybirdarrow_forwardSuppose that the top six firms in an industry have total annual sales of $150 billion, $100 billion, $90 billion, $60 billion, $50 billion, and $10 billion, respectively. Instructions: Round your final answers to the nearest whole number. a. What is the four-firm concentration ratio for this industry? percent b. What is the Herfindahl index for this industry? ces c. Suppose another industry has a Herfindahl index of 1,500. Are firms in the second industry likely to have more or less market power? (Click to select)arrow_forward
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