Consider the table below, then answer the questions that follow. All information
ID: 2495228 • Letter: C
Question
Consider the table below, then answer the questions that follow. All information is for domestic firms.
1,400,000
a. What is the 4-firm concentration ratio?
b. What is the 8-firm concentration ratio?
c. What would happen to the concentration ratios if industry B's product is a substitute for industry A's product?
d. what would happen to the concentration ratios if the sales of imported goods in Industries A and B that are sold in domestic markets were included?
Domestic Firms in Industry A Sales (annual) 1 $2,000,000 2 1,500,000 31,400,000
4 1,100,000 5 1,000,000 6 700,000 7 200,000 8 100,000 9-20 (remaining firms) 1,000,000Explanation / Answer
1) first 4 firms sales / total sale * 100 = 0.66
2) 8000000/9000000=0.88
3) The concentration ratio would not change
4) The concentration ratio will increase by adding both goods a and b in the market .