Question

Suppose that the distribution of sales within an industry is as shown in the table.

a. What is the four-firm concentration ratio for this industry?

b. What is the eight-firm concentration ratio for this industry?

Short answer

An industry in which all of its firms contribute to total output. The four-firm concentration ratio is used to calculate the industry concentration ratio.

(a)

As a result, the concentration ratio of the four firms is 52 percent.

(b)

This means that the market's top eight firms account for 87 percent of total market sales.

Step-by-step solution

Given information 

That are given tables calculated are : (a).

Representation of a table which shows a distribution of sales within an industry

Explanation (a)

(a) The diagram below depicts a table displaying the distribution of sales within an industry.

The table above shows the percentage of total market sales. The concentration ratioof the four companies is calculated byconsidering the totalmarket share of the fourmajor companies. As a result, the concentrationrate of the four companies is 52%. (15+14+12+11).

Given information 

The following numbers have been calculated: (b)

The percentage sales are added to calculate the ratio.

Explanation (b)

(b) The eight-firm concentration ratio is calculated by adding the percentage sales of the market's top eight firms. As a result, the eight firms' concentrate ratio is 87 percent.$(15+14+12+11+10+$$10+08+07)$This means that the market's top eight firms account for 87 percent of total market sales.