Asked by Zheng Jacky on May 25, 2024
Verified
Given the information in the table below,calculate (a)the concentration ratio;and (b)the Herfindahl-Hirschman index.
Percent of Firm Sales 12622031441351067758292101‾100%\begin{array}{l}\text { Percent of }\\\begin{array} { c c } \text { Firm } & \text { Sales } \\1 & 26 \\2 & 20 \\3 & 14 \\4 & 13 \\5 & 10 \\6 & 7 \\7 & 5 \\8 & 2 \\9 & 2 \\10 & \underline{1} \\& 100 \%\end{array}\end{array} Percent of Firm 12345678910 Sales 262014131075221100%
Herfindahl-Hirschman Index
A concentration measure used to calculate the level of competition within an industry by summing the squares of the market shares of all firms within the industry.
- Determine the magnitude of industry concentration employing both concentration ratios and the Herfindahl-Hirschman Index.
Verified Answer
AN
Angela NguyenMay 28, 2024
Final Answer :
(a)26 + 20 + 14 + 13 = 73
(b) (26)2+(20)2+(14)2+(13)2+(10)2+(7)2+(5)2+(2)2+(2)2+(1)2=676+400+196+169+100+49+25+4+4+1=1624\begin{array} { l } ( 26 ) ^ { 2 } + ( 20 ) ^ { 2 } + ( 14 ) ^ { 2 } + ( 13 ) ^ { 2 } + ( 10 ) ^ { 2 } + ( 7 ) ^ { 2 } + ( 5 ) ^ { 2 } + ( 2 ) ^ { 2 } + ( 2 ) ^ { 2 } + ( 1 ) ^ { 2 } = \\676 + 400 + 196 + 169 + 100 + 49 + 25 + 4 + 4 + 1 = 1624\end{array}(26)2+(20)2+(14)2+(13)2+(10)2+(7)2+(5)2+(2)2+(2)2+(1)2=676+400+196+169+100+49+25+4+4+1=1624
(a)26 + 20 + 14 + 13 = 73
(b) (26)2+(20)2+(14)2+(13)2+(10)2+(7)2+(5)2+(2)2+(2)2+(1)2=676+400+196+169+100+49+25+4+4+1=1624\begin{array} { l } ( 26 ) ^ { 2 } + ( 20 ) ^ { 2 } + ( 14 ) ^ { 2 } + ( 13 ) ^ { 2 } + ( 10 ) ^ { 2 } + ( 7 ) ^ { 2 } + ( 5 ) ^ { 2 } + ( 2 ) ^ { 2 } + ( 2 ) ^ { 2 } + ( 1 ) ^ { 2 } = \\676 + 400 + 196 + 169 + 100 + 49 + 25 + 4 + 4 + 1 = 1624\end{array}(26)2+(20)2+(14)2+(13)2+(10)2+(7)2+(5)2+(2)2+(2)2+(1)2=676+400+196+169+100+49+25+4+4+1=1624
Learning Objectives
- Determine the magnitude of industry concentration employing both concentration ratios and the Herfindahl-Hirschman Index.