Concentration Ratio and HHI
Incorrect.
This is the concentration ratio of the top two firms after the merger.
The table shows data for several companies:
| Company | Percentage of Market |
|---------|----------------------|
| Firm A | 40% |
| Firm B | 30% |
| Firm C | 15% |
| Firm D | 5% |
| Firm E | 5% |
| Firm F | 5% |
If the top two companies merge, the industry's three-firm concentration ratio will be _closest_ to:
Incorrect.
This is the concentration ratio of the top firm after the merger.
Correct.
The merger would give Firm AB 70% of the market. Add to that the market share of Firms C and D to get the concentration ratio of 90%.
70%.
85%.
90%.
