If the Snowboard Industry Is Dominated by Four Large Firms

question 115

Multiple Choice

If the snowboard industry is dominated by four large firms, each with 20% market share, and two small firms, each with 10% market share, what is the four-firm concentration ratio and what is the Herfindahl-Hirschman Index (HHI) ?

• A) four-firm concentration ratio = 60; HHI = 1,600
• B) four-firm concentration ratio = 60; HHI = 1,800
• C) four-firm concentration ratio = 80; HHI = 1,600
• D) four-firm concentration ratio = 80; HHI = 1,800

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Definitions:

Sales Tax

A sales tax is a government-imposed levy on the sale of goods and services, which is usually a percentage of the retail price.

Freight Charges

Costs associated with the transportation of goods from one location to another, typically paid by the shipper or receiver.

Straight-Line Method

A method of calculating depreciation of an asset by evenly spreading its cost over its expected useful life.

Salvage Value

The estimated residual value of an asset after its useful life has ended and it can no longer be used for its originally intended purpose.