Question

Suppose a company that covers the entire country, has exactly ONE store in each of the 50 states, and all the stores are of equal size. Determine the four-firm concentration ratio, based on national data.

Answer 1

The four-firm concentration ratio for a company with one store in each state is 2%.

Step-by-step explanation:

The four-firm concentration ratio measures the combined market share of the four largest firms in an industry. To determine the four-firm concentration ratio for the company with one store in each state, we first need the market share of each store.

Since all the stores are of equal size, each store has a market share of 1/50 or 2%. The four-firm concentration ratio is calculated by adding the market shares of the four largest firms, which in this case is the same as the market share of a single store, 2%. Therefore, the four-firm concentration ratio is 2%.