Chapter13:Monopolistic Competition and Oligopoly (+ Appendix)

Worked Problems

Problem 13.1 - actions of market concentration

Problem:

Suppose the the 6 this firm in an industry have actually total yearly sales that $70 billion, $40 billion, $30 billion, $30 billion, $20 billion, and also $10 billion.

You are watching: The four-firm sales concentration ratio for an industry measures the

What is the four-firm concentration proportion in this industry?What is the Herfindahl index because that this industry?Suppose one more industry has a Herfindahl table of contents of 4000. What can you conclude about the loved one competitiveness of these 2 industries?

Answer:

The four-firm concentration ratio is the proportion of the sales the the four largest firms in the sector relative to complete industry sales, expressed together a percentage. In this industry, full sales space $200 billion and the optimal four combined have sales that $170 billion. The four-firm concentration ratio is climate 170/200 = .85, or 85%.The Herfindahl table of contents is computed as the amount of the squared industry shares for every firms in the industry. In this example, the 6 firms have actually market share of 35%, 20%, 15%, 15%, $10%, and 5%. The table of contents is 352 + 202 + 152 + 152 + 102 + 52 = 2200.Larger index numbers correspond to much more highly concentrated industries. Accordingly, that company in the 2nd industry are likely to have an ext market power.
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Choose a ChapterChapter 1Chapter 2Chapter 3Chapter 4Chapter 5Chapter 6Chapter 7Chapter 8Chapter 9Chapter 10Chapter 11Chapter 12Chapter 13Chapter 13WChapter 14Chapter 15Chapter 16Chapter 17Chapter 18Chapter 19Chapter 20Chapter 21Chapter 22Chapter 23Chapter 24Chapter 25Chapter 26Chapter 27Chapter 28Chapter 29Chapter 30Chapter 31Chapter 32Chapter 33Chapter 34Chapter 35Chapter 36Chapter 37Chapter 38Chapter 39Chapter 39WCOI 1
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Textbook Resources

Chapter Activities

Choose a ChapterChapter 1Chapter 2Chapter 3Chapter 4Chapter 5Chapter 6Chapter 7Chapter 8Chapter 9Chapter 10Chapter 11Chapter 12Chapter 13Chapter 13WChapter 14Chapter 15Chapter 16Chapter 17Chapter 18Chapter 19Chapter 20Chapter 21Chapter 22Chapter 23Chapter 24Chapter 25Chapter 26Chapter 27Chapter 28Chapter 29Chapter 30Chapter 31Chapter 32Chapter 33Chapter 34Chapter 35Chapter 36Chapter 37Chapter 38Chapter 39Chapter 39WCOI 1

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