Explain why a Concentration Ratio of 23 percent for newspapers understates true market concentration. Comment on Concentration Ratio of 6 percent in steel metal work industry and 77 percent in the radio industry.

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Yusra AneesLv10

28 Sep 2019

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Suppose that a small town has seven burger shops whose respective shares of the local hamburger market are (as percent- ages of all hamburgers sold):23 percent, 22 percent, 18 percent, 12 percent, 11 percent, 8 percent, and 6 percent.

What is the four-firm concentration ratio of the hamburger industry in this town?

What is the Herfindahl index for the hamburger industry in this town?

If the top three sellers combined to form a single firm, what would happen to the four-firm concentration ratio and to the Herfindahl index?

sangriamouse112

Which of the following correctly describes a difference between the four-firm concentration ratio and the Herfindahl index?

A. The four-firm concentration ratio measures the degree of concentration among all but four firms in an industry, whereas the Herfindahl index measures the degree of concentration among all firms in an industry.

B. The Herfindahl index is equal to the sum of the squares of the market shares of all firms in the industry; the concentration ratio is the sum of the market shares of the largest four firms in the industry.

C. The Herfindahl index only considers domestic firms, while the concentration ratio only considers foreign firms.

D. The Herfindahl index is equal to the sum of the squares of the market shares of the largest four firms in the industry; the concentration ratio focuses on the relative percentages sales of all firms in the industry.

beigetortoise309

The widget industry is comprised of six firms of varying sizes. Firm 1 has 35 percent of the market. Firm 2 has 25 percent, and the remaining firms have 10 percent each.

a) what is the four firm concentration ratio for the industry?

b)What is the Herfindahl-Hirschman index for the widget industry?

c) based on the depatment of justice merger guidlines descrideb in the textbook, if the Herfindahl-Hirschman index is between 1500 and 2500 after a merger, and the merger increase the Herfindahl-Hirschman index by more then 100, the FTC and DOJ may challenge the merher. do youthnik the justice department would be lilkely to block a merger between firm 5 and 6? show your work

lemonelk133

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Explain why a Concentration Ratio of 23 percent for newspapers understates true market concentration. Comment on Concentration Ratio of 6 percent in steel metal work industry and 77 percent in the radio industry.

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Principles of Economics

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