1. Ten firms compete in a market to sell product X. The total sales of all firms selling the product are $2,500,000. Ranking the firms’ sales from highest to lowest, we find the top four firms’ sales to be $240,000, $220,000, $200,000, and $178,000, respectively. Calculate the four-firm concentration ratio in the market for product X.
Instruction: Round your answer to 2 decimal places.
2. An industry consists of three firms with sales of $230,000, $760,000, and $200,000.
a. Calculate the Herfindahl-Hirschman index (HHI).
Instruction: Round to the nearest integer.
b. Calculate the four-firm concentration ratio (C4).
3. A firm has $2,000,000 in sales, a Lerner index of 0.7, and a marginal cost of $40, and competes against 900 other firms in its relevant market.
Instruction: Round your answers to 2 decimal places.
a. What price does this firm charge its customers?
b. By what factor does this firm mark up its price over marginal cost?