Concentration ratios and how to calculate a concentration ratio
A concentration ratio measures how much of a market the largest firms control. Add up the market shares of the top firms to get the ratio.
Formula
CRn = sum of market shares of the n largest firms (%)
Real World
The UK supermarket sector has a CR4 of roughly 65%, meaning Tesco, Sainsbury's, Asda, and Morrisons together control nearly two-thirds of grocery sales — a textbook indicator of oligopoly.
Exam Focus
Show your working when calculating a concentration ratio; state which firms you included and confirm the figure is a percentage of total market sales.
Price Elasticity of Demand
PED = % change in quantity demanded ÷ % change in price
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