One way of assessing market structure is the use of concentration indexes, Two p
ID: 1112490 • Letter: O
Question
One way of assessing market structure is the use of concentration indexes, Two popular concentration indexes are the four-firm concentration ratio and the Herfindahl-Hirschman Index (HHI) information in the table below to answer the questions. . Use the Total Revenue Please calculate the four-firm concentration ratio and enter it below. Please express this value as a percent. Firm Calliopes $25000 LaRosas PJs Number $15000 $22500 $17500 $5000 (each) Dons 25 other smaller firms Please calculate the HHI value and enter it below. Number Based on your calculations above, what is the market structure of this industry? O Monopoly O Monopolistic Competition O OligopolyExplanation / Answer
The market structure is oligopoly because FF concentration ratio is 39.02% and HHI is 544.32
Since there are 29 firms and only four are major firms, the market is monopolisticaally competitive.
Find that FF concentration ratio is found as the sum of the market share of first four firms. HHI is found as the sum of the squares of the market shares.
First four firms TR Market share C 25000 12.20 148.72 L 15000 7.32 53.54 P 22500 10.98 120.46 D 17500 8.54 72.87 Remaining 125000 60.98 148.72 Total sales 205000 100.00 Four firm ratio 39.02 HHI 544.32Related Questions
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