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 A is:

Question

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The four-firm concentration ratio is the sum of the market shares of the four largest firms in an industry. In this case, the four largest firms in industry A have sales of $5 million, $2 million, $1 million, and $1 million, respectively. The sum of their market shares is (5 + 2 + 1 + 1) / (5 + 2 + 1 + 1 + 1) = 0.9.

Suppose That There Are Two Industries, a and B