Suppose the market for good X has a four-firm concentration ratio of 0.80.Having worked for the four largest firms in the industry,you know the sales for these four firms are given by $100,000,$125,000,$150,000,and $175,000.Based on this information,we know that sales for the remaining firms in the industry are:

Question

Quizplus · Accepted Answer

The four-firm concentration ratio of 0.80 (or 80%) means that the four largest firms account for 80% of the market sales. The total sales of the four firms are $100,000 + $125,000 + $150,000 + $175,000 = $550,000. Since this represents 80% of the market, the total market sales are $550,000 / 0.80 = $687,500. Therefore, the sales for the remaining firms in the industry are the total market sales minus the sales of the four largest firms: $687,500 - $550,000 = $137,500.

Suppose the Market for Good X Has a Four-Firm Concentration