Question

In: Economics

Five brands are competing in the market.Company A has 35,000 units sold at $5.00/unit. It...

Five brands are competing in the market.

Company A has 35,000 units sold at $5.00/unit. It sold to 7,000 households in market size of 84,000.
Company B has 12,000 units sold and revenues of $54,000 for these units. It sold to 3,000 households in market size of 21,000.
Company C has 14,000 units sold at $5.50/unit. The average household purchase was 2 units. Its market size of 105,000.
Company D has 5,000 units sold at $6.00/unit. It sold to 833 households in market size of 5,000.
Company E has 22,000 units sold and revenues of $126,500 for these units. It sold to 5,500 households in market size of 22,000

What is the volume (unit) market share for Company A? (Show as xx%.)

What is the "three firm" concentration revenue ratio value? (Show as xx.xx%)

What is the Herfindahl unit index score value? (Show as x.xxxx)

What is the market penetration percentage value for Company C? .(Show as xx.xx%)

What is the market penetration share percentage for Company D? (Show as xx.xx%)

Solutions

Expert Solution

What is the volume (unit) market share for Company A?

Market Share by Units = (Unit Sales / Total Market Unit Sales) x 100%

As per the question:

Unit sales of company A = 35,000 units

Total Market Unit Sales = 35,000 units + 12,000 units + 14,000 units + 5,000 units + 22,000 units = 88000 units

Total Market Unit Sales = 88000 units

Market Share by Units = (35,000 units/88000 units) x100

= 0.3977 x100 = 39.77%

Market Share by Units = 39.77%

What is the "three firm" concentration revenue ratio value?

Concentration revenue ratio measures the share of top n firms in the industry and identify the nature or type of industry like, market is monopoly, oligopoly or competitive.

3CR = (R1 + R2 + R3)/RT

Where,

CR = Concentration revenue ratio ( Here use 3CR because we have to calculate "three firm" concentration revenue ratio value)

R1 , R2 & R3 is the revenue of top four values.

RT = Sum of revenues of all firms (RT)

As per the question:

Revenue of the company-

Revenue = Total unit sales x Price per unit

A = 35,000 x 5 = $ 175,000

B = $54,000

C = 14,000 x 5.50 = $77,000

D = 5000 x 6 = 3,000

E = $126,500

RT = $435,500

3CR = (R1 + R2 + R3)/RT

3CR = ($ 175,000 + $126,500 + $77,000)/ $435,500

= 0.8691 x 100 = 86.91%

3CR = 86.91%

What is the Herfindahl unit index score value?

Its focus on market concentration.

Herfindahl unit index score value = The market share percentage of firm A^2 + The market share percentage of firm B^2 + The market share percentage of firm C^2 + The market share percentage of firm D^2 + The market share percentage of firm E^2

Market Share = Company’s Revenue (Sales)/Entire Market Revenue (Sales)

The market share percentage of firm A = ($ 175,000//$435,500) x 100 = 40.18

The market share percentage of firm B = ($54,000/$435,500) x 100 = 12. 39%

The market share percentage of firm C = ($77,000/$435,500) x 100 = 17.68%

The market share percentage of firm D = ($3,000/$435,500) x 100 = 0.68%

The market share percentage of firm E = ($126,500/$435,500) x 100 =29.04%

We we take the figure in whole number

Herfindahl unit index score value = 40^2 + 12^2 + 18^2 + 1^2 + 29^2

= 1600 + 144 + 324 +1 + 841 = 2910

Herfindahl unit index score value = 2910

What is the market penetration percentage value for Company C?

Market penetration rate, or penetration rate, is the percentage of your target customers that make at least one purchase over a period of time.

Market penetration percentage value for Company C = ( number of units sold within a reporting period by company C/Total sales volume including those sold by competitors. ) x 100

Where sales volume is-Sales volume is the number of units sold within a reporting period.

Market penetration percentage value for Company C = (14000/88000) x 100 = 15.90%

Market penetration percentage value for Company C = 15.90%

What is the market penetration share percentage for Company D?

Market penetration percentage value for Company D = (Number of people who have purchased product of company C/Market potential or size of the market ) x 100

Market penetration percentage value for Company D = (833/5000) x 100 = 16.66%

Market penetration percentage value for Company D = 16.66%

Rahul Sunny answered 2 years ago

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