Question

Suppose that a small town has seven burger shops whose respective shares of the local hamburger market are (as percentages of all hamburgers sold): 27%, 26%, 21%, 12%, 8%, 4%, and 2%. Instructions: Enter your answers as whole numbers. a. What is the four-firm concentration ratio of the hamburger industry in this town? b. What is the Herfindahl index for the hamburger industry in this town?

Answer 1

86%

2074

Step-by-step explanation:

The four-firm concentration ratio is the concentration ratio of the four largest firms.

four-firm concentration ratio = 27% + 26%, 21%, + 12% = 86%

The HHI index is found by squaring the concentration ratio of all the firms and adding them together.

729 + 676 + 441 + 144 + 64 + 16 + 4 = 2074

I hope my answer helps you.