Question

The total output of the chair industry is 2,000 chairs per month. If firms A, B, C, and D are the four largest firms in the industry, calculate the four-firm concentration ratio for the chair industry by finding out what percentage of the total output the four firms are responsible for. Round your answer to the nearest whole percent.

Answer 1

The four-firm concentration ratio for the chair industry, rounded to the nearest whole percent, is 90%.

Step-by-step explanation:

The four-firm concentration ratio is calculated by adding the market shares of the four largest firms in an industry. In this case, we need to find the market shares of firms A, B, C, and D and add them together. Let's assume that the market shares of the four firms are 30%, 25%, 20%, and 15% respectively. Adding these together, we get 30% + 25% + 20% + 15% = 90%.

Since the question asks for the answer to be rounded to the nearest whole percent, the four-firm concentration ratio for the chair industry is 90%.

Answer 2

Step-by-step explanation:

To calculate concentration ratio,

CR4 = (X1 + X2 + X3 + X4) / T

In this equation:

X is the total sales of an individual company (sales figures for the four largest firms are used in the four-firm concentration ratio)

T is the total sales of the industry or market in question.

From the question, T was given as 2000, but individual sales of this companies were not given.

We have

CR4= (A+B+C+D)/2000

I believe the information provided in the question is not sufficient to determining percentage of the total output the four firms are responsible for.