Question

Table 25.2 Market Share Output (Revenue) $20,000 $16,000 $2,000 Pool Sweeper (8) North Star Hurricane Blue Lagoon Clean Sweep $2,000 Refer to Table 25.2. Assume there are only four firms in the pool sweeper industry. What is the market share for Blue Lagoon?

Answer 1

Solution:-

Pool Sweeper	Outputs	Market Share
North Star	$20,000	50%
Hurricane	$16,000	40%
Blue Lagoon	$2000	5%
Clean Sweep	$2000	5%
Total	$40,000

(1). Market Share for Blue – Lagoon = Output Blue lagoon / Total Output * 100

                                                                  = $2,000 / $40,000 * 100

                                                                  = 5%

(2). The HHI index is calculated as follows:

HHI = (50) ^2 + (25) ^2 + (25) ^2

= 2500 + 625 + 625

= 3750

Answer is Option (D) 3750