Economics - Economics Section 1
41. An analyst gathers the following market data for an industry:
| Company | Revenue (In million$) |
| UBL | 900 |
| HBL | 800 |
| NBP | 700 |
| NIB | 600 |
| MCB | 500 |
| Others | 400 |
The industry’s four-company concentration ratio is closest to:
- Option : B
- Explanation : The top four companies in the industry comprise 77% percent of industry sales: Concentration Ratio = (900 + 800 + 700 + 600) / (900 + 800 + 700 + 600 + 500 + 400) = 77%
42. An analyst has gathered the following data for an industry comprising of five firms:
| Company | Market Share (%) |
| UBL | 35 |
| HBL | 30 |
| NBP | 25 |
| NIB | 5 |
| MCB | 5 |
The industry’s three-firm Herfindahl-Hirschmann Index is closest to:
- Option : A
- Explanation : The three-firm Herfindahl-Hirschmann Index is = 0.35² + 0.30² + 0.25² = 0.275.
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