What is the four-firm concentration ratio in the given industry sales data?

The four-firm concentration ratio is a measure used to determine how much market share is held by the four largest firms in a particular industry. In this case, the total industry sales are $90 million, with the top four firms (A, B, C, and D) accounting for sales of $15 million, $3.5 million, $1.3 million, and $0.8 million, respectively. Now, let's calculate the four-firm concentration ratio based on the given data:

Understanding Four-Firm Concentration Ratio in Industry Sales

22 Nov 2022

Calculating Four-Firm Concentration Ratio

Total industry sales: $90 million

Sales of Firm A: $15 million

Sales of Firm B: $3.5 million

Sales of Firm C: $1.3 million

Sales of Firm D: $0.8 million

First, we need to calculate the total sales of the top four firms:

Total sales = $15 million + $3.5 million + $1.3 million + $0.8 million = $20.6 million

Now, we can use the formula for the four-firm concentration ratio:

Four-Firm Concentration Ratio = Total sales of the top four firms / Total industry sales

Four-Firm Concentration Ratio = $20.6 million / $90 million

Four-Firm Concentration Ratio = 0.228 = 0.23

Therefore, the four-firm concentration ratio for the given industry sales data is 0.23, indicating that the top four firms hold approximately 23% of the total market share in the industry.

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Calculating Four-Firm Concentration Ratio

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