The four-firm concentration ratio is to be calculated.
Answer to Problem 1CACQ
Four-firm concentration ratio is 38%
Explanation of Solution
Given:
The total sales of all the 10 firms selling the product are $2000000.
The first four firm's sales are $260000, $220000, $150000 and $130000
The four-firm concentrationratio measures the proportion of sale of industry being done by top four firms. It shows market power in an industry.
Since, the first four firm's sales are $260000, $220000, $150000 and $130000, the four-firm concentration ratio is given by:
Hence, the four-firm concentration ratio in the market for product is 0.38 or 38%.
Introduction:
Theratio measures the proportion of sale of industry being done by top four firms. It shows market power in an industry.
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