Suppose an industry is made up of 16 firms.Three firms each sell 12 percent of the industry's total output; another three firms each sell 8 percent; another five firms each sell 5 percent; and the last five firms each sell 3 percent.What is the eight-firm concentration ratio in this industry?

Question

Quizplus · Accepted Answer

The eight-firm concentration ratio is the sum of the market share percentages of the top 8 firms in the industry. We know that there are three firms each selling 12 percent (36 percent total), three firms each selling 8 percent (24 percent total), and five firms each selling 5 percent (25 percent total). Therefore, the top 8 firms control 85 percent (36%+24%+25%) of the industry's output. Answer choice D, 0.70, is the closest to 0.85.

Suppose an Industry Is Made Up of 16 Firms