Suppose that the most popular car dealer in your area sells 4 percent of all vehicles.

instructions: enter your answers as whole numbers.

a. if all other car dealers sell either the same number of vehicles or fewer, what is the largest value that the herfindahl index could possibly take for car dealers in your area? .

b. in that same situation, what would the four-firm concentration ratio be? percent.

Please find the detailed answer as follows:

Explanation:

a. If all other car dealers sell either the same number of vehicles or fewer, what is the largest value that the Herfindahl index could possibly take for car dealers in your area?

Herfindahl index- 400 Largest ((4 squared) * 25) If all other car dealers sold as much as the number one car dealer i.e 4%, so all car dealers in this industry sell at 4% which would allow only for the 25 firms (25=100% (total) divided by 4).

b. In that same situation, what would the four-firm concentration ratio be? percent

Four-Firm concentration ratio would be 16% [16= (4 (%) * 4 (top four firms)] because all firms sell at 4%, therefore the top four firms would be at 4%.

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