Question

Suppose that there are two industries, A and B. There are five firms in industry A with sales at $5 million, $2 million, $1 million, $1 million, and $1 million, respectively. There are four firms in industry B with equal sales of $2.5 million for each firm. The four-firm concentration ratio for industry A is:
.9

Answer 1

Answer:

0.9

Explanation:

The formula to compute the four-firm concentration ratio is shown below:

= (Total firm sales of industry A) ÷ (Total firm sales of industry B)

where,

Total firm sales of industry A = $5 million + $2 million + $1 million + $1 million

= $9 million

And, the total firm sales of industry B would be

= $2.5 million × 4 firms

= $10 million

So, the ratio would be

= $9 million ÷ $10 million

= 0.9