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Answer The Following Questions, Which Relate To Measures Of Concentration:.

a. What is the meaning of a four-firm concentration ratio of 60 percent? -The largest four firms in the industry account for 60% of sales. What is the meaning of a four-firm concentration ratio of 90 percent? Which of the following is a shortcoming of concentration ratios as measures of monopoly power? -They do not account for inter-industry competition. b. Suppose that the five firms in industry A have annual sales of 30, 30, 20, 10, and 10 percent of total industry sales. For the five firms in industry B the figures are 60, 25, 5, 5, and 5 percent. Calculate the Herfindahl index for each industry and compare their likely competitiveness. Your comparison of their likely competitiveness:
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a. The largest four firms in the industry account for 60 % of sales. -The largest four firms in the industry account for 90% of sales. -They do not account for inter-industry competition. Herfindahl index for industry A = 2,400 Herfindahl index for industry B = 4,300 Industry A will be more competitive than Industry B.
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