The accompanying table shows the total dollar amount of sales in 2012 for the fo
ID: 1209328 • Letter: T
Question
The accompanying table shows the total dollar amount of sales in 2012 for the four largest firms in the adhesive manufacturing industry.
Glues R Us, Inc
Glue Down, Inc.
Sticky, Inc.
All Glues, Inc.
All other firms in industry combined
If Glues R Us, Inc. split into two separate companies, the 4 firm concentration ratio would __________ and the market price of adhesive would likely __________.
A.) increase; fall B.) increase; rise C.) decrease; not chane D.) decrease; fall E.) decrease; rise
Similarily, the accompanying table shows the dollar amount of sales in 2012 for the four largest firms in the above-ground pool industry. Total industry sales in 2012 were $467,000.
Firm Name:
Dollar Amount of Sales in 2012
Blue Water Island, Inc.
$112,000
Backyard Paradise, Inc.
$47,000
Tropical Waters, Inc.
$19,000
Poolside Plastics, Inc.
$14,000
All other firms in industry combined
$275,000
What is the four-firm concentration ratio in this industry?
) 24%
41%
68%
78%
94%
First Name Dollar Amount of Sales in 2012Glues R Us, Inc
$362,000Glue Down, Inc.
$105,000Sticky, Inc.
$85,000All Glues, Inc.
$76,000All other firms in industry combined
$154,000Explanation / Answer
The accompanying table shows the total dollar amount of sales in 2012 for the four largest firms in the adhesive manufacturing industry.
First Name
Dollar Amount of Sales in 2012
Con. ratio
Glues R Us, Inc
$362,000
46.2%
Glue Down, Inc.
$105,000
13.4%
Sticky, Inc.
$85,000
10.8%
All Glues, Inc.
$76,000
9.7%
80.1%
All other firms in industry combined
$154,000
19.6%
782,000
If Glues R Us, Inc. split into two separate companies, the 4 firm concentration ratio would ___decrease_______ and the market price of adhesive would likely ____to fall______.
D.) decrease; fall
Similarly, the accompanying table shows the dollar amount of sales in 2012 for the four largest firms in the above-ground pool industry. Total industry sales in 2012 were $467,000.
Firm Name:
Dollar Amount of Sales in 2012
Market share
Blue Water Island, Inc.
$112,000
23.9%
Backyard Paradise, Inc.
$47,000
10%
Tropical Waters, Inc.
$19,000
4%
Poolside Plastics, Inc.
$14,000
3%
All other firms in industry combined
$275,000
58.88%
Total
467,000
100%
Concentration ratio ofth $ largest firms in the industry = 23.9+10+4+3 = 40.9 =41%
Answer = B
First Name
Dollar Amount of Sales in 2012
Con. ratio
Glues R Us, Inc
$362,000
46.2%
Glue Down, Inc.
$105,000
13.4%
Sticky, Inc.
$85,000
10.8%
All Glues, Inc.
$76,000
9.7%
80.1%
All other firms in industry combined
$154,000
19.6%
782,000
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