Answer:
a)the largest Herfindahl index possible = 200
b)the four firm concentration ratio = 8%
Step-by-step explanation:
a) from the question, it follows that the largest share any dealer can have is 2% and the sum of all dealer shares must equal 100% of the market.
We therefore have a maximum number of firms to be 100%/2% = 50.
Since we now know that the maximum number of firms is 50,thus;
At a maximum concentration share of 2% for all firms, the largest Herfindahl index possible = number of firms x percentage squared for each firm = 50 x (2)² = 200
b) In the same logic above, the four firm concentration ratio = 4 x share of the market = 4 x 2% = 8%
20% = $180
100% = x
20x = 180 × 100
20x = 18,000
x = 900
The original price is $900
Answer:
the value x is 0 and the value of y is 2
