2 June, 19:11

# 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 B is:

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Answers (1)
1. 2 June, 20:21
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The four-firm concentration ratio for industry B is 1.00

Explanation:

Concentration ratio: It is a ratio which shows a relationship of total sales of each firm with the total industry sales

In mathematically,

Concentration ratio = (Total sales of each firm) : (total industry sales)

where,

Total sales of each firm = \$2.5 million + \$2.5 million + \$2.5 million + \$2.5 million = \$10.00 million

And, the industry sales = \$5 million + \$2 million + \$1 million + \$1 million + \$1 million = \$10.00 million

Now put these values to the above formula

So, the ratio would equal to

= \$10 million : \$10 million

= 1.00
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