Answer
Four-firm concentration ratio is defined as the sum of percentage market shares of four largest firms in the industry
Total number of watches produced in a year = 100
Here, the market share of the companies are
1. 30/100 *100 = 30%
2. 20/100 *100 = 20%
3. 20/100 *100 = 20%
4. 20/100 *100 = 20%
5. 10/100 *100 = 10%
Four-firm concentration ratio = 30+20+20+20 = 90
Work Step by Step
Given that, there are 5 firms that make watches
Output levels of the firms are
1. 30 watches per year
2. 20 watches per year
3. 20 watches per year
4. 20 watches per year
5. 10 watches per year
